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.

The reform our NHS really needs

 With NHS reform getting a lot of attention, the Socialist Health Association Scotland has published a discussion paper I drafted that outlines the issues and seeks views on the way ahead. It is vital that those who support the founding principles of the NHS engage in this debate and don't leave it to those who use 'reform' as a code for the privatisation of healthcare.

Nicola Sturgeon’s resignation has reminded everyone that she was the first SNP Health Secretary in 2007, holding the post until 2012. It has to be said she started well, building up constructive relationships with the trade unions. The previous Labour Health Minister, Andy Kerr, did many positive things but could be abrasive. In the main, she continued with the previous government’s policies. Labour had ended the marketisation of the NHS, abolished NHS Trusts, and introduced cooperation rather than competition. She went a little further by outlawing private companies running GP practices, a growing trend in England, and further developed the NHS partnership model of industrial relations. But, overall, it was continuity with emollience.

However, while continuity has its strengths, it also meant tough political decisions were ducked. Nicola Sturgeon binned a report by Professor David Kerr that proposed a shift from hospital to community care, with better social care integration. Consequently, when budgets tightened with austerity, bed numbers fell, but social care capacity did not respond to growing demand from an ageing population. After promising to scrap PFI, they rebranded it. Instead, we got worthwhile reforms around minimum alcohol pricing and free prescriptions, but the significant structural challenges were ignored. The focus on inequality and prevention, recommended by the Christie Commission, is still gathering dust on the shelf.

Now, in the wake of a pandemic, these long-standing issues are biting the NHS with a vengeance. Waiting times have spiralled along with staff vacancy rates, ambulances queue outside A&E, cancer treatment has slowed, drug deaths have doubled, and health inequalities are worsening. Even when they eventually got around to reforming social care, they took a sensible National Care Service plan around national frameworks and turned it into a centralised monster - devouring local government and community services in its wake.  

This table highlights how much NHS capacity has been reduced.

So, it is now left to others to pursue genuine reform. Not Tory privatisation or insurance systems which, as Gordon Brown highlights, would add more costs to an NHS whose spending levels have not matched similar countries. A point seemingly lost on a particular Green Scottish Government minister as well.

As for Scottish Labour's new plan to merge health boards, that is fine as far as it goes. I recall coming across the same plan presented to a pre-devolution health minister when I worked in the health department. The problem is that merging acute boards makes sense only if you manage community services in another way. We have tried many different ways of doing this since Joint Finance in the 1970s, and none have been a complete success.

An actual reform programme would start by tackling the underlying causes of ill health. It is a national disgrace that men in the most deprived areas of Scotland not only live 14 years less but can expect to spend 35% of their lives in poor health. NHS capacity has to be grown, not cut. That means better primary care, dentistry and more beds in our hospitals. A fully integrated NHS that ends the costly small business model and the growth of corporate dentistry, financed from tax havens. 

A National Care Service based on local accountability, which improves pay and conditions for carers in Scotland, improving the quality of social care and relieving the pressure on hospital capacity. We now have more patients that don’t need to be in a hospital than the number of beds in our largest hospital. We also need proper workforce planning and fair pay and conditions to tackle recruitment and retention in health and social care, ending reliance on exorbitant agency costs, locums, staff banks, and the private sector.

And last but not least, recognising that one size does not fit all in a diverse Scotland. A strategy for rural health care services.

The NHS is on life support. However, real reform must address the underlying pressures, which means tackling health inequalities and social care.

Nicola Sturgeon departs - opportunity, or more of the same?

Nicola Sturgeon's resignation and subsequent leadership contest are likely to dominate the airwaves for a while at least. Personally, I wish her well - eight years as First Minister is a tough shift for anyone. I have had my disagreements with her over the years, but as the STUC said this morning, she was always willing to engage with trade unions, and there was genuine and mutual respect. I will not be joining any celebration, and those who compare this to Thatcher's resignation have seriously lost the plot.

It will be a real challenge for the SNP to replace her and take forward their independence agenda. But, in an uncertain world, economically and militarily, that will be a big challenge anyway. My main criticism of the Scottish Government is the obsession with process over delivery. If you want to build confidence that Scotland could do better as an independent country, then the various delivery problems, including the ferries, recycling and the National Care Service (NCS), need to be managed better. 

The SNP, since entering government, hasn't been known for developing a debating culture. However, even before Nicola's resignation, there were signs that the culture may be changing. As Stephen Flynn, the SNP's Westminster leader, put it, 'there has to be space for people to disagree and to disagree without being disagreeable'. The SNP Trade Union Group has called on the Scottish Government to be more creative with its powers, and they have joined criticisms of the NCS and Freeports.

The Red Paper Collective published the latest edition of their magazine this week in time for the Scottish Labour and STUC conferences. The editorial picks up on these themes, including Stephen Noon's call for a more consensual path for Scotland's constitutional debate. Gordon Brown's Commission at least got the constitutional debate on the UK agenda, even if it offered a limited vision for Scotland. Professor James Mitchell offers a sceptical analysis of the de-facto referendum strategy, which is now up for grabs anyway. As a strategy, it again focuses on the process rather than the case for independence. Beth Winter MP gives us an insight into the different approaches Wales is taking to their constitutional debate.

Alex Rowley MSP, offers some thoughts on how to end Scotland’s constitutional groundhog day. His article is worth reading in full rather than the lurid newspaper headlines. Scottish Labour also needs new thinking on the constitution if it wants to achieve more than simply replacing the Tories as the opposition. He also looks to the Welsh approach for inspiration. He argues that Scottish Labour should make a case for new powers when it is in Scotland's interest.

My contribution to the magazine focuses on one such new power – immigration. This is a crucial issue for Scotland as our population is not projected to increase at the same rate as the rest of the UK. The number of working-age Scots to support our ageing population won’t be available without immigration. Devolved immigration initiatives are not new in Scotland, going back to Labour's Fresh Talent Initiative. However, other countries have gone much further, most notably Canada. Sadly, UK ministers and shadow ministers have not seriously looked at the international evidence and how this can be achieved without the leakage of migrants to other parts of the UK. The Scottish Visa system proposed by the Scottish Government is a good starting point, although it would need more UK cooperation than they may like. On this point, Gordon Brown's duty of cooperation would help.

As Neil Findlay asks in his Red Paper article, 'Where is the mature discussion?' He is critical of Nicola Sturgeon starting a debate that fell far short of what she promised, and the same applies to her unionist opponents. A 51%-49% strategy is never going to deliver a settled position. Nevertheless, he ends on a positive note, hoping that someone in the SNP will recognise that creating a new state based on a polarised, divided community is not a particularly good idea. And that Scottish Labour will equally wake up from its delusions. 

Just maybe, a change in SNP leader is an opportunity to build sustainable change in the same way the case for devolution was made. But again, like Neil, I won't be 12 stone again or achieve a single-figure golf handicap!

P.s. A bit of personal news. I have taken on the role of Interim Director at the Jimmy Reid Foundation this week. I would be pleased to hear from friends of the Foundation who have projects they wish us to take forward.

NHS Reform: It’s Social Care Stupid!

 The current NHS crisis has spawned a flurry of proposed reforms to the National Health Service. They range from privatisation to the use of volunteers. However, most miss the point. The underlying problem facing the NHS across the UK is the failure to invest in social care.

The most obvious symptom of the NHS crisis is Accident and Emergency (A&E). Less than 68% of people were assessed, treated, admitted or discharged within the Scottish Government’s four-hour A&E target. More than 6,800 people spent more than 12 hours in A&E in October. While there is much in the Scottish Futures report to agree with, including patient-centred care, more volunteers doesn’t hack it. While the different NHS systems in the UK should cooperate, their emphasis on this is more political than practical. NHS Scotland is big enough to operate mainly on its own. More UK bureaucracy won't help.

The latest NHS Scotland delayed discharge statistics illustrate the need to focus on social care. A delayed discharge occurs when a hospital patient who is clinically ready for discharge from inpatient hospital care continues to occupy a hospital bed beyond the date they are ready for discharge. In October 2022, the average number of beds occupied per day due to delayed discharges was 1,898, the highest figure since the current guidance came into place in July 2016. To put this number in context, the Queen Elizabeth University Hospital in Glasgow has 1677 beds. So, delayed discharge is the equivalent of our largest hospital and then some. The chart below shows this is not a short-term blip.

There is also a human cost. In October 2022, there were 58,826 days spent in hospitals by people whose discharge was delayed. This is an increase of 17% compared with the number of delayed days in October 2021. No one wants to, or should, stay in a hospital any longer than they need to. This is on top of the financial cost, as hospital beds cost far more than social care provision.

The latest care inspectorate statistics showed that 60% of care services that employ nurses reported vacancies, creating a 16% vacancy rate. The staffing issues are not limited to social care. NHS district nurses play a crucial role in supporting people to return home from hospital. The vacancy rate for district nursing reached 16% last month. The Westminster Adult Social Committee has highlighted similar concerns in England.

The idea that more privatisation is the solution is risible. As Prem Sikka recently highlighted, social care companies are robbing the public purse, with profit margins of between 37% and 41.7%, and tax dodging is rife. This is the model that people like Karol Sikora want to expand! In addition, self-funding care home residents are now paying 40% more than publicly-funded residents, compared with 24% a decade ago.  

Sadly, the proposed National Care Service in Scotland will do nothing to challenge this, taking even more services from the public sector. Moreover, as the Scottish Parliament Finance Committee report highlighted, the costings of this over-centralised service are largely unknown. Still, we do know that it will divert much-needed resources from frontline services. Creating a National Care Service remains the right approach. However, its role should be to create a national framework, with services designed and delivered locally. Implementing organisational change of this magnitude will take a significant amount of time. In the meantime, we need to support the demoralised, tired, and financially stretched frontline staff who immediately need a break, decent pay and a vote of confidence. 

There has been a welcome initiative from former health ministers Alex Neil and Malcolm Chisholm to end zero-hours contracts. However, the response from Social Care Minister Kevin Stewart that companies bidding for government work are evaluated on their fair working practices "where it is relevant and proportionate to do so" - is not good enough.

Patients overwhelmingly access the NHS through GP services. However, patient surveys show this is becoming increasingly difficult despite GPs delivering more appointments (not all in person) than before the pandemic. Patient satisfaction is 12% down in the last year, with 10% saying it had become more difficult even to contact their GP practice. Some of the byzantine appointment systems don't help and put excessive pressure on reception staff, who take the brunt of patient dissatisfaction. 

This is primarily an issue for non-urgent treatment; charging better-off patients won’t help address this. While it may discourage some appointments, this short-term gain will result in long-term pain as conditions go undiagnosed, resulting in more severe conditions for the NHS to treat. The solution is recruiting more GPs and other health staff in primary care. GP numbers have fallen from 3,613 in 2019 to 3,494 in 2022. Scottish Government targets focus on headcount, which ignores the growing number of part-time staff. A BMA Scotland survey indicated that 75% are more likely to quit or reduce hours in the coming year due to ‘excessive workload’. Five years on, the deployment of multi-disciplinary teams has fallen short because of staffing shortages. 

Moving away from the expensive small-business model would also help in the longer term. Many more GPs, particularly younger staff, are coming to this view. For example, GPs at the Lothian LMC have recently said that the independent contractor model ‘is no longer fit for purpose.’

The NHS as an institution rightly attracts almost universal support, primarily because we all rely on it. That doesn't mean it is sacrosanct, and it is perfectly reasonable to debate reform. However, we must be wary of those who use reform as a trojan horse to promote their ideological agenda. The founding principles of an NHS free at the point of need, funded by general taxation, is the best way to organise healthcare. The NHS's main problem is the absence of adequately funded social care and primary care. That should be our focus right now. Anything else is a distraction.

Rebalancing the UK

 Big-picture reform may not be on everyone's list of priorities, but governments should be able to tackle big long-term projects while also addressing the immediate issues. Unfortunately, the short-termism of so many politicians has undermined the UK for far too long. In this context, we now have the long-awaited report of Gordon Brown's Commission on the UK's Future. 

The report starts with a persuasive case for change. The country was in crisis long before the pandemic and the economic consequences of Russia’s invasion of Ukraine. There are always excuses for not tackling the big issues, and successive governments have ducked them. Yes, we have an incompetent and ideologically driven government that has failed to deliver acceptable levels of investment, economic success and good-paying jobs. But, as the report says, the way our country is run is preventing us from making the changes we need for a better future.

Few could argue with the analysis in the paper of the challenges. These include the scourge of inequality, loss of trust in politics, and centralisation. Britain hasn’t taken back control as promised with Brexit – Westminster and Whitehall have. The same is true in Scotland by the Scottish Government. While there have been global factors, the UK has handled them less well, as this chart shows:

And while economic growth is not all we should be concerned about, at least on current definitions, our relative position has crashed.

This is particularly the case for workers. Pay and living standards for most people in Britain have not improved, and taxes have risen to pay for worse public services, making this a lost decade for British families. 

There are some broad solutions proposed to address these issues. Unsurprisingly, there is an emphasis on shared UK purpose and values while recognising that people in the nations of the UK feel morally and politically abandoned by the present UK government. So, the report argues that powers must be decentralised to the right place - in the nations, regions and communities. While there is more detail about local government in England, because this is devolved, many of the reforms proposed would also be welcomed in Scotland as an antidote to SNP centralisation. They reflect the arguments I made in a Reid Foundation paper a few years ago. My only exception is the obsession with directly elected Mayors. There is nothing democratic about centralising power in the hands of one person.

There are reforms proposed for Westminster, cleaning up the corruption that undermines trust in politics and Britain’s voice in the world. A long overdue plan to replace the House of Lords with a new second chamber of Parliament: an Assembly of the Nations and Regions. We should ignore the Lords who oppose this on spurious grounds, acting like Turkeys who don’t want to vote for Christmas. 

On Scottish devolution, the focus is on embedding the constitutional settlement, strengthening the Sewel Convention and introducing mechanisms to improve cooperation across the UK. While devolving powers is not the only way to enhance devolution, the principle of subsidiarity demands that powers be devolved to the lowest practical level. It is here that the report is weakest. Gordon's Treasury orthodoxy screams out of the pages, with the resistance to prudential borrowing powers that apply to local authorities but not the devolved administrations. New taxes can only be introduced by agreement with the UK government, which jars with the principles the paper claims to espouse. Today's STUC paper is much better on public finance issues.

On specific powers, devolving job centres is fine, but employment law is only to be shared. And what about drug policy and immigration? The Red Paper Collective has set out the case for devolving these powers clearly. Of course, all these should be exercised in cooperation when they can have implications for the rest of the UK. But the starting point is to recognise that not all parts of the UK have similar problems or require the same solutions. 

This report does offer a new approach that should appeal to the 40% of those living in Scotland who are not entrenched in either side of the national obsession. However, it could have been bolder in key areas, which also fall some way short of Scottish Labour’s policy positions on further devolution. Electoral reform is another issue that has been ducked, despite the recent UK conference decision.

Overall, we should thank Gordon Brown for embarking on this process because it takes someone of his stature to ensure this debate gets a hearing. While the report has weaknesses, the proposals would at least help rebalance the UK politically and economically.