The Water Industry Commission for Scotland has published their annual report today.
It shows that water bills in Scotland are £20 less than the average for England, despite the additional costs the industry faces north of the border. At the same time, customer service levels have improved markedly, leakage has been cut by around 36%, and more than £5.5 billion has been invested in maintaining current assets, and improving drinking water quality and environmental performance.
All of this demonstrates the success of Scotland's public service model. Not that you would know that by reading the report. The pro-privatisation WIC Chief Executive makes constant references to Scottish Water as 'the company'. It isn't - it's a public service and an essential one at that.
Wednesday, 30 June 2010
Cuts and unemployment
Very revealing Treasury leak in today's Guardian on the impact cuts will have on unemployment.
They reveal that: "Unpublished estimates of the impact of the biggest squeeze on public spending since the second world war show that the government is expecting between 500,000 and 600,000 jobs to go in the public sector and between 600,000 and 700,000 to disappear in the private sector by 2015... A slide from the final version of a presentation for last week's budget, seen by the Guardian, says: '100-120,000 public sector jobs and 120-140,000 private sector jobs assumed to be lost per annum for five years through cuts."
This confirms the argument we and a growing number of economic commentators in Scotland have been making, that the private sector will be affected both through the loss of government contracts and from the knock-on impact of lower public spending. Our estimate of 0.75 private sector jobs for every 1 public sector job loss now appears to be an underestimate. The Treasury model clearly assumes at least 1 for 1, something that was previously described as 'scaremongering'.
Perhaps not surprisingly the Chancellor decided not to reveal these facts in this budget. Obviously 'openess and transparency' doesn't run to telling the real truth about the misery spending cuts will have on workers in the public and private sector.
They reveal that: "Unpublished estimates of the impact of the biggest squeeze on public spending since the second world war show that the government is expecting between 500,000 and 600,000 jobs to go in the public sector and between 600,000 and 700,000 to disappear in the private sector by 2015... A slide from the final version of a presentation for last week's budget, seen by the Guardian, says: '100-120,000 public sector jobs and 120-140,000 private sector jobs assumed to be lost per annum for five years through cuts."
This confirms the argument we and a growing number of economic commentators in Scotland have been making, that the private sector will be affected both through the loss of government contracts and from the knock-on impact of lower public spending. Our estimate of 0.75 private sector jobs for every 1 public sector job loss now appears to be an underestimate. The Treasury model clearly assumes at least 1 for 1, something that was previously described as 'scaremongering'.
Perhaps not surprisingly the Chancellor decided not to reveal these facts in this budget. Obviously 'openess and transparency' doesn't run to telling the real truth about the misery spending cuts will have on workers in the public and private sector.
Tuesday, 29 June 2010
Canadian experience
We have just published our quarterly Revitalise bulletin that looks at developments in public service reform across Scotland and beyond. In this issue we feature on Canada because their deficit reduction 'miracle' appears to be the new blue print for the ConDems cuts agenda. Canadian budget officials also gave evidence to the Scottish Parliament's Finance Committee inquiry. In fairness they did not regard their reduction as a 'miracle', explaining that it just involved some hard choices about service cuts.
The Canadian 'miracle' does not hold up to close inspection unless you think its fair to create hospital waiting lists, push people into poverty and raise the costs of higher education in order to afford tax cuts for the wealthy. In a similar way to the current media hype about the deficit in the UK, the Canadian Right created deficit hysteria in the 90s. Conrad Black's National Post newspaper led the way with page after page about the need for tax cuts. The same Conrad Black was convicted in Illinois in 2007 and sentenced to serve 78 months in federal prison for fraud and obstructing justice.
Canada did cut its budget deficit from 66% of GDP in 1993 to a surplus in 1998. While the media talks of successful deficit reduction, the cuts in Canada had massive social costs. Canada now has one of the least generous unemployment schemes in the OECD with less than half of unemployed workers qualifying for benefits.
The promised national childcare and early learning programme was cut before it was even implemented. At least 265 000 public service jobs were lost in Canada. Waiting lists for non emergency treatment grew. As is already being discussed here, tuition fees for higher education increased at an average annual inflation rate of 9.6%. In Alberta education spending was cut by 12.4% and healthcare by 18% and social services by 19.3%.
The cuts also had a lasting economic impact, so despite the Canadian economy growing in the late 1990s unemployment remained high: 8.7% in 2000 and average hourly and weekly wages stood still. The income gap between rich and poor grew faster than most of the other 30 developed nations when previously it had been average.
The reward for this pain was tax cuts. These though benefit the rich substantially more than everyone else while cuts in services hit those on low incomes. A tax cut of $20 a week hardly compensates for a 10% increase in the cost of sending your child to University.
It is therefore no surprise that the ConDems are so keen on the Canadian model. Rich bankers created the mess and the poor will pay the very high price of cleaning it up.
The Canadian 'miracle' does not hold up to close inspection unless you think its fair to create hospital waiting lists, push people into poverty and raise the costs of higher education in order to afford tax cuts for the wealthy. In a similar way to the current media hype about the deficit in the UK, the Canadian Right created deficit hysteria in the 90s. Conrad Black's National Post newspaper led the way with page after page about the need for tax cuts. The same Conrad Black was convicted in Illinois in 2007 and sentenced to serve 78 months in federal prison for fraud and obstructing justice.
Canada did cut its budget deficit from 66% of GDP in 1993 to a surplus in 1998. While the media talks of successful deficit reduction, the cuts in Canada had massive social costs. Canada now has one of the least generous unemployment schemes in the OECD with less than half of unemployed workers qualifying for benefits.
The promised national childcare and early learning programme was cut before it was even implemented. At least 265 000 public service jobs were lost in Canada. Waiting lists for non emergency treatment grew. As is already being discussed here, tuition fees for higher education increased at an average annual inflation rate of 9.6%. In Alberta education spending was cut by 12.4% and healthcare by 18% and social services by 19.3%.
The cuts also had a lasting economic impact, so despite the Canadian economy growing in the late 1990s unemployment remained high: 8.7% in 2000 and average hourly and weekly wages stood still. The income gap between rich and poor grew faster than most of the other 30 developed nations when previously it had been average.
The reward for this pain was tax cuts. These though benefit the rich substantially more than everyone else while cuts in services hit those on low incomes. A tax cut of $20 a week hardly compensates for a 10% increase in the cost of sending your child to University.
It is therefore no surprise that the ConDems are so keen on the Canadian model. Rich bankers created the mess and the poor will pay the very high price of cleaning it up.
Thursday, 24 June 2010
Scottish Gypsy Travellers
I attended a round table discussion today hosted by Amnesty International to address the struggles of the Scottish Gypsy Traveller community. Branches have raised this issue at UNISON Scottish Council and the STUC debated the issue at this year's congress.
Gypsy Travellers probably first came to Scotland in the 12th century and there are around 25,000 living in Scotland today. Some 20% of these living in caravans or similar culturally appropriate accommodation. They suffer from widespread racial discrimination, a shortage of permanent and transit sites and find it virtually impossible to secure legal representation for civil matters.
In 2001 the Scottish Parliament's Equal Opportunities Committee made 37 recommendations to address the community's concerns. However, few if any have been implemented. There are plenty of fine words in Scottish Government and council statements - but little action.
We discussed a range of possible campaign actions that focus on raising public awareness of the challenges facing Scottish Gypsy Travellers coupled with practical measures to address housing and human rights. A range of organisations have come together so far, and we want to pull together a broader coalition of civic society organisations around an agreed Charter. The harassment and discrimination this community faces daily, truly is Scotland's hidden shame.
Gypsy Travellers probably first came to Scotland in the 12th century and there are around 25,000 living in Scotland today. Some 20% of these living in caravans or similar culturally appropriate accommodation. They suffer from widespread racial discrimination, a shortage of permanent and transit sites and find it virtually impossible to secure legal representation for civil matters.
In 2001 the Scottish Parliament's Equal Opportunities Committee made 37 recommendations to address the community's concerns. However, few if any have been implemented. There are plenty of fine words in Scottish Government and council statements - but little action.
We discussed a range of possible campaign actions that focus on raising public awareness of the challenges facing Scottish Gypsy Travellers coupled with practical measures to address housing and human rights. A range of organisations have come together so far, and we want to pull together a broader coalition of civic society organisations around an agreed Charter. The harassment and discrimination this community faces daily, truly is Scotland's hidden shame.
Wednesday, 23 June 2010
Budget hangover
Scotland is waking up to a pretty severe hangover from yesterday's budget. Apart from the personal impact on the low paid in particular, there will be a big impact on public services.
Translating the UK budget cuts into Scottish expenditure can only be estimated until the Comprehensive Spending Review in the autumn, when the Barnett consequentials for Scotland will be calculated. The best estimate from yesterday’s figures is that this will mean a cut in the block grant of around £4.75bn by 2014 – a real terms cut of 16%. This is less than the headline 25% cut in non-protected departmental allocations, because of the proportion of devolved spending that is in protected departments, primarily health. However, we should recognise that protected in real terms means in accordance with the Treasury inflation allowance. This is 1.5% this year, when real inflation is currently 5.1%. The UK government is maintaining an inflation target of 2% for next year, so this is likely to mean a real terms cut in spending, even in protected departments.
Government budget allocations are also only part of the story. The real cuts at council and health board level will be much greater. They start by factoring in unavoidable commitments including:
• Real inflation exceeding Treasury allowance (particularly energy)
• Increased demand on services
• Reduction in income
• Concordat and other service growth (e.g. class sizes)
• Impact of council tax freeze
• Strengthening balances
• Part year impact of cuts
I took part in a BBC radio phone in programme this morning. From the those calling in there was a growing realisation of the impact this will have on the Scottish economy. For every one job lost in the public sector between .70 and 1 job could be lost in the private sector. This will seriously slow up growth, or at worst cause a double dip recession. Either way misery for many workers and their families.
Translating the UK budget cuts into Scottish expenditure can only be estimated until the Comprehensive Spending Review in the autumn, when the Barnett consequentials for Scotland will be calculated. The best estimate from yesterday’s figures is that this will mean a cut in the block grant of around £4.75bn by 2014 – a real terms cut of 16%. This is less than the headline 25% cut in non-protected departmental allocations, because of the proportion of devolved spending that is in protected departments, primarily health. However, we should recognise that protected in real terms means in accordance with the Treasury inflation allowance. This is 1.5% this year, when real inflation is currently 5.1%. The UK government is maintaining an inflation target of 2% for next year, so this is likely to mean a real terms cut in spending, even in protected departments.
Government budget allocations are also only part of the story. The real cuts at council and health board level will be much greater. They start by factoring in unavoidable commitments including:
• Real inflation exceeding Treasury allowance (particularly energy)
• Increased demand on services
• Reduction in income
• Concordat and other service growth (e.g. class sizes)
• Impact of council tax freeze
• Strengthening balances
• Part year impact of cuts
I took part in a BBC radio phone in programme this morning. From the those calling in there was a growing realisation of the impact this will have on the Scottish economy. For every one job lost in the public sector between .70 and 1 job could be lost in the private sector. This will seriously slow up growth, or at worst cause a double dip recession. Either way misery for many workers and their families.
Tuesday, 22 June 2010
Emergency UK Budget
We are all in this together according to the Chancellor. However, when you look at the detail some are more "in this" than others.
The VAT increase, cuts in welfare benefits, public sector pay and service cuts, all hit the lowest paid and the disadvantaged hardest. An increase in tax allowances is small compensation. In contrast the Chancellor (or more accurately his Liberal coalition partners) has bottled the capital gains tax tax loophole and done nothing to plug the other tax dodging scams. The Council Tax freeze in England will have the same impact as it has had in Scotland - a tax cut for the better off.
Plenty of corporate welfare as all the evidence shows that Corporation Tax cuts go straight into the bottom line. And the bankers, yet again, getting off lightly with a modest bank levy that will cost them a fraction of the effective public sector insurance scheme's value. The share price recovery no doubt reflects the champagne corks popping in the city - bonuses all round again boys. What we need is a ‘Robin Hood” tax on financial transactions that could raise £30bn, making a significant dent in the country’s deficit.
The real kick in this budget are the planned spending cuts. It looks as if we will have to await the autumn spending review to calculate the full Barnett consequentials for Scotland. However £17bn of cuts at UK level means real misery. Adding 500,000 public service workers to the dole between now and 2015 will cost around £10 billion in lost tax and increased benefit payments. This would almost entirely cancel out the reduction in the pay bill, as well as dealing a massive blow to local economies and communities.
The real aim of this budget is not to cut the deficit. It's about cutting back the role of public services and restricting benefits to a modest safety net. An ideological drive to create a Conservative dreamland. In reality it will restrict growth and cause misery for millions.
The VAT increase, cuts in welfare benefits, public sector pay and service cuts, all hit the lowest paid and the disadvantaged hardest. An increase in tax allowances is small compensation. In contrast the Chancellor (or more accurately his Liberal coalition partners) has bottled the capital gains tax tax loophole and done nothing to plug the other tax dodging scams. The Council Tax freeze in England will have the same impact as it has had in Scotland - a tax cut for the better off.
Plenty of corporate welfare as all the evidence shows that Corporation Tax cuts go straight into the bottom line. And the bankers, yet again, getting off lightly with a modest bank levy that will cost them a fraction of the effective public sector insurance scheme's value. The share price recovery no doubt reflects the champagne corks popping in the city - bonuses all round again boys. What we need is a ‘Robin Hood” tax on financial transactions that could raise £30bn, making a significant dent in the country’s deficit.
The real kick in this budget are the planned spending cuts. It looks as if we will have to await the autumn spending review to calculate the full Barnett consequentials for Scotland. However £17bn of cuts at UK level means real misery. Adding 500,000 public service workers to the dole between now and 2015 will cost around £10 billion in lost tax and increased benefit payments. This would almost entirely cancel out the reduction in the pay bill, as well as dealing a massive blow to local economies and communities.
The real aim of this budget is not to cut the deficit. It's about cutting back the role of public services and restricting benefits to a modest safety net. An ideological drive to create a Conservative dreamland. In reality it will restrict growth and cause misery for millions.
Thursday, 17 June 2010
What no CBI press release?
Shock horror, no CBI press release today calling for pay restraint in the public sector. No lectures on the need for private sector disciplines etc....
Whilst we are used to bare faced hypocrisy from some business leaders, even they might think today is not a good day to lecture others. A report by Incomes Data Services says bonus levels in FTSE 100 boardrooms have increased by an average of 22.5% over the past six months to just shy of £559,000. Salaries have risen by 7% from last year.
It’s also not just the big companies who are cashing in. According to the survey, which looked at 237 directors in 180 listed companies, bosses of FTSE 250 companies have seen their total incomes (salary and bonuses) rise by 8%, and Small Cap directors’ pay went up by 5.3%.
All a far cry from real terms pay cuts in the public sector.
A period of embarrased silence from the CBI would now be appropriate. But I suspect that is expecting too much!
Whilst we are used to bare faced hypocrisy from some business leaders, even they might think today is not a good day to lecture others. A report by Incomes Data Services says bonus levels in FTSE 100 boardrooms have increased by an average of 22.5% over the past six months to just shy of £559,000. Salaries have risen by 7% from last year.
It’s also not just the big companies who are cashing in. According to the survey, which looked at 237 directors in 180 listed companies, bosses of FTSE 250 companies have seen their total incomes (salary and bonuses) rise by 8%, and Small Cap directors’ pay went up by 5.3%.
All a far cry from real terms pay cuts in the public sector.
A period of embarrased silence from the CBI would now be appropriate. But I suspect that is expecting too much!
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