Council charges now equivalent to half the income from Council Tax

Audit Scotland has published a report on local government charges for services. UNISON Scotland published its own work on the subject in May of this year, showing how charges appeared to be plugging the gap caused by the Council Tax freeze. Not a popular message at the time with the Scottish Government, as we debated the issue over the airwaves. But as always, we are first with the key facts!

This report confirms that the income that councils raise from charges has risen over the last decade and is estimated at some £1.3 billion, or approximately 7% of a council’s overall expenditure. That’s equivalent to over
 50% of the amount they raise through council tax. And this doesn’t include rents or fines.

The proportion of income from charges rose from 5.6% in 2003/04 to 7.4% in 2013. The implementation of the council tax freeze in 2007/08 altered the relative proportion of councils’ income from charges as the chart below demonstrates.

Councils are facing continuing financial pressures through increasing costs and demands on services. The Scottish Government funding settlement to local authorities for 2013/14 is £9.9 billion, a decrease of about 2.25% in real terms. As a consequence there is an increasing need for councils to examine potential sources of income, including charging more for their services.

Councils do not have complete freedom to charge for services. Many council services are provided with no direct charge to the service user like children’s education and street cleaning. Councils do however have discretion to charge for other services such as planning consents and building control certificates, the use of sports facilities, licensing and burials and cremations. Councils may also offer price concessions to certain service users based on, for example, their age, employment or financial circumstances.

Councils apply charges to a wide range of services, but the biggest service area is social work, followed by roads and transport (see below)

As locally elected bodies it can be expected that councils' charging policies will differ. The report recommends that councils should be transparent about their charges and set them in the context of wider service objectives. Councils should be aware of any unexplained inconsistencies and be able to explain why their charging policy differs from other authorities, including the use of benchmarking.

As UNISON said in May, charges are cutting deep into people’s pocket and are often regressive. Freezing the Council Tax will not reduce poverty or inequality. Councils need resources to continue providing vital services rather than impose damaging cuts or punitive charges.

Energy companies make a great case for public ownership

The energy companies again shoot themselves in the foot with a no show by chief executives at the Commons Energy and Climate Change Committee.

Only two of the “Big Six” chief executives appeared before the committee in person. The other four sent lower-ranking executives to answer questions.

Labour MP Ian Lavery didn’t mince his words, “It’s a disgrace that the same energy bosses who have imposed huge price rises are refusing to defend them in front of MPs. The energy bosses aren’t just turning their noses up at the House of Commons, they’re also turning their noses up at millions of hard-pressed consumers who do not understand why they are facing even higher energy bills this winter. It might be half-term for the energy bosses, but ordinary working people face a winter of misery because of these greedy companies and their unjustified price hikes.”

The strength of Scottish customer concern was highlighted by one of the subs, Neil Clitheroe, head of retail and generation at ScottishPower. He revealed that 60,000 customers called the company with concerns “virtually straight away” when the firm announced its 8.6 per cent increase in bills last week.

The companies, with support from the Prime Minister, have used Green levies as a smokescreen for rises. But as Philip Pearson at the TUC points out, there is some £9bn in taxpayer and consumer subsidies and less than a third goes to low carbon energy support. Fossil fuel, gas and nuclear gets the rest.

Their other defence is wholesale price increases. However, as this chart (Labour List) shows, there was a 1.7% increase in wholesale prices as against an 11.1% consumer cost hike.

The one cost companies have been good at cutting is their own tax bill. The Independent on Sunday exposed Scotia Gas, half owned by SSE, that runs Scotland’s gas networks. They have used a tax loophole to avoid £72m in tax. In response to this news Ed Miliband said, “On top of failing to address the broken energy market, David Cameron is failing to stamp out tax avoidance. We have a prime minister unwilling to take the side of hard-working people. Unwilling to act against the energy companies, unwilling to clamp down on tax avoidance and close down tax loopholes."

If that isn’t enough, a whistleblower at British Gas revealed to the Guardian that the company is siphoning off £20m of extra profits annually, by keeping hold of money owed to former customers who have built up credit on their accounts.

As Michael Meacher put it in Left Futures, “Nobody makes a better case that exploitative private markets in areas of basic public need repeatedly evade proper regulation and can only be made to serve the public interest by being brought back, whether whole or in part, into public ownership.”

Whether it’s a Swiss based tax exile at Grangemouth, or the ‘Big 6’ energy companies – it’s they who are holding Britain to ransom. It’s time to put the ‘public’ back into monopolistic services, and what’s more, the polls show the public agrees.

Watch out for pension scam

The Sunday Times has a good article today (Money 27 October) on pension liberation scams. I have previously highlighted this problem in our Scottish Pensions Bulletin, but it is worth repeating. Not least because I have personally had two approaches in recent weeks, and while I spotted the scam, others may not have my pensions knowledge.

Pension liberation scams are playing on many folks current financial problems with wages not keeping up with prices. In these circumstances people are looking at any means of freeing up cash rather than get into further debt. Pension funds seem like a good idea when you are approached by these cowboy firms.

Auto-enrolment is likely to add to the numbers open to this scam that has already attracted £420m from workers pensions.

The scam works by persuading savers to transfer their pension in return for a permanent loan that appears to get around tax rules that prevent access to funds before the Minimum Pension Age of 55. What they are not told is that they face a 40% unauthorised transaction charge, rising to 55% if they liquidate more than a quarter of the pension pot. When you add 30% commission, it leaves a paltry 15% for the worker.

Astonishingly, much of the scam mechanisms are not actually illegal. The government needs to take urgent regulatory action to safeguard consumers.

Staffing cuts lead to assaults at work

A 'toxic cocktail' of staffing cuts and violence against public service workers has resulted in another increase in violent incidents across Scottish councils and NHS Scotland.

I am at Stirling University today presenting UNISON Scotland's annual survey of violent incidents to UNISON's health and safety conference. 33,689 incidents were reported to public service employers last year - almost 14,000 more than when the first survey was first conducted in 2006.

In probably the only employment group protected from cuts, police officers, the number of incidents fell by around one-third (by 3074 to 6187). However, council and NHS workers, who face big staffing reductions, have seen an increase in violent incidents. Incidents in councils have increased by 730 to 14,879. NHS incidents are up by 1744 to 12618.

In simple terms, the biggest increase in violent incidents is happening in those services that have suffered staffing cuts. This statistical correlation is backed up by feedback from members who highlight too few staff to deliver on the risk assessments that have been undertaken. A particular concern is the impact of welfare reform. Our members are having to ask some very intrusive questions of service users who are at the sharp end of benefit cuts and other service reductions. It is sadly inevitable that verbal abuse will increasingly turn violent.

The politicians who pass these evil laws are not having to face the consequences of their decisions. It is public service workers are the front line. Workers are stretched too thinly, dealing with the public who are coping with cuts in the services they rely on.

I am pleased to say that there has been some improvement in recording, particularly in the NHS, but some councils couldn’t even produce statistics. If they can’t produce decent statistics they cannot be monitoring, let alone tackling the problem. There are also positive indications that a number of public bodies are preparing for further problems when the full impact of welfare reform happens. There is very clear guidance for councils on how to address this issue in Managing Occupational Violence in the Workplace (2010). NHS Scotland has similar PIN polices.

Convictions under the Emergency Workers Act have increased again last year by 32 to 355. Due to the limited scope of the Act few violent incidents result in criminal action. Sadly, efforts to address this were blocked by the Scottish Government when they opposed Hugh Henry MSP’s, Protection of Worker’s Bill. The UK Government has also undermined protection for workers with cuts to the Criminal Injury Compensation scheme. The Scottish Conservatives recently published the outcome of their FoI survey of assaults on emergency workers. While we welcome their interest, we could have done with their support in changing the legislation! Not to mention their government cuts that are adding to the problems of our members.

Behind every violent incident is a personal tragedy for the worker concerned. Often short term physical injury and longer term psychological damage. No one should have to work under the fear of assault.

The UNISON Scotland Survey of Violence at Work 2012 is online here:
http://www.unison-scotland.org.uk/safety/ViolenceAtWorkSurveyOctober2013.pdf

How austerity is squeezing pensions

Another by product of austerity economics is the squeeze on savings for a pension. That is bad news for workers and a potentially massive burden on public services.

The annual Scottish Widows Women and Pensions Report highlighted a further drop in the amount workers are able to put aside for their pensions. In particular, the number of women saving adequately for their retirement has reached an all-time low, with just four in 10 UK women putting enough away in their pension pot - typically £1000 less per year than men. Women are on average putting £2184 away per year into a pension pot while men are saving £3120.

Older women are also more likely to be relying on their partner’s pensions and suffer in pension terms from career breaks. In the Scottish Local Government Pension Scheme (LGPS) women receive an average pension that is only half that of men (£3.5k compared to £7k), despite having similar average pensionable pay.

The report urged politicians and the industry to "work harder" to understand the obstacles to building a retirement pot faced by women, who are often forced to prioritise more immediate family needs over long- term saving.

While the focus of this report is women, men are not in a much better position. In the last few years of austerity economics less income is being squeezed, so that workers simply don't have the surplus income to put into a pension pot. In addition the loss of quality defined benefit pension schemes means more workers are relying on poor quality schemes with high costs that deliver poor returns on investment.

With a high proportion of women workers, maintaining the quality of public sector pension schemes is particularly important. Early indications are that auto-enrolment is working by getting more women, particularly older and part-time workers into the schemes. In the Scottish LGPS our audit shows that even before auto-enrolment women were entering the scheme at a higher level than you might expect given the preponderance of part-time working.

The overall gender split is 72% female to 28% male. In terms of membership of the Scottish LGPS, 26% of female members are not in the scheme compared with 21% of men. The difference is not as great as might be expected given the much larger proportion of part-time female members. For example, 40% of women not in the scheme work less than 10 hours. There is also a rough correlation between men and women in the scheme by age. The most significant outlier is actually young men aged 21-30 who are less likely to be in the scheme. It would appear young women are more sensible.

These issues have been important considerations in the negotiations over a new Scottish LGPS. Members should by now have received their ballot papers and an explanatory leaflet explaining how we have focused on keeping contributions stable, to keep as many members as possible in the scheme at this difficult time.

However, the real challenge is getting the quarter of the local government workforce into the pension scheme, along with many more in the wider workforce as highlighted by today’s report. That requires governments to understand that workers can only save for a pension if they have disposable income – and that means proper pay rises. Without that the demographic time bomb will explode with a vengeance.

Using public procurement to help create a fairer Scotland

Nearly £11bn of public money is spent each year in Scotland buying goods and services. That’s a lot of purchasing power. Government and public bodies should be using this power as an opportunity to help create a fairer Scotland.

Today, I am at the SNP conference and our fringe meeting is on procurement. As the First Minister put it; “The Procurement Reform Bill has the potential to make a difference to many lives. It will provide new powers to tackle companies that do not comply with their legal obligations, including blacklisting and employment law.”

That’s fine as far as it goes, but procurement can do much more than ensure legal obligations are complied with – that should be taken as read. UNISON has joined a broad coalition of civil society organisations (STUC, SCCS, SCVO and others) who have identified ten priorities for the Bill.

Let’s take the procurement of social care as just one example. Over £400m is spent by councils alone on home care in Scotland, mostly in the private and voluntary sector. Increasing demand for services and declining local authority budgets means these services are being squeezed. The consequences are little short of a national disgrace. Home care workers, often paid little above the National Minimum Wage, employed on zero or nominal hour contracts are literally running around our communities trying to look after some of the most vulnerable members of society.

Much has been written about the 15 minute care visit. However, as one care worker said to me recently, “15minutes - that’s a luxury!” They describe a typical day as constantly trying to catch up from too many visits with inadequate travelling time, that some are not even paid for. The only way to finish the day is to cut corners in what are already inadequate care packages. The days when staff could spend some quality time with clients, looking beyond basic care needs, have long gone. Added to this is the growth of personalisation. While fine in principle, in practice it is leading to the loss of socialisation, with day centre closures leaving people isolated in their own homes.

This is no way to treat elderly people. We should specify, through procurement, decent employment standards, including the Scottish Living Wage, with no zero-hours contracts and proper training programmes. The aim should be to develop a workforce that delivers continuity of care, not workers who are desperate to find another job. Person centered procurement recognises that procuring pens, pencils and paper should be an entirely different process to buying people services such as social care.  The race to the cheapest is rarely the best approach and especially when we are procuring services for the most vulnerable in our communities.

Better employment standards not only drive up the quality of service, but are also good for the economy. Paying the Scottish Living Wage means the taxpayer is not subsidising bad employers through the benefit system. Workers with decent wages and secure contracts will have the confidence to buy goods and services that create sustainable economic growth. Studies show that firms that pay the living wage have lower absenteeism, greater commitment and continuity of the workforce. This is how to really, ‘make work pay’.

Procurement should be used as part of stronger efforts to tackle tax dodging and tax avoidance, both at home and in developing countries.  This could bring in much-needed billions of pounds for the public purse. It is entirely wrong that companies seeking to avoid paying their fair share of tax should be awarded public contracts.

The same applies to fair trade. Ethical and responsible trading policies have the potential to transform lives around the world. The opportunity to sell products for a fair price and to work in safe and decent conditions could help millions work their way out of poverty. The Procurement Bill should help Scotland cement its status as a Fair Trade Nation and to lead the way in ethical procurement.

Scotland has some of the most challenging climate change targets in the world and the legislation includes a duty upon all public bodies to contribute to meeting these emissions targets. Those companies supplying the public sector should be able to show that they are contributing to a more sustainable Scotland. They can do this by publishing an annual assessment of their carbon emissions and providing information on the carbon emissions attributable to the whole life of goods and services supplied.

Public procurement, particularly at a time of financial constraints, has the potential to do much more than just deliver goods and services. If we place sustainable and ethical considerations at the heart of the procurement process, it could promote positive social outcomes for us all.

Let's challenge poverty

Challenge Poverty Week is an opportunity to highlight the extent of poverty in Scotland and to build support for further action.

The Poverty Alliance is coordinating Challenge Poverty Week (CPW) this week. The key messages are:

Poverty is a real problem in Scotland, affecting large and growing numbers of people;
Wide inequalities between groups and individuals damages our whole society;
Poverty is created by the decisions we make as a society;
People living on low incomes have a voice and should be heard;
Change is possible!

The Trussell Trust has revealed today that five times more Scots are turning to food banks for emergency aid than last year. Between April and September, 23,073 people were referred to the Trussell Trust for three days’ worth of food – comprising 16,465 adults and 6,608 children. That compares with 4,021 people in the same months of 2012 – 2,786 adults and 1,235 children. The Scottish figures are significantly higher than in the UK as a whole.

As TUC General Secretary Frances O’Grady put it: "One only has to look at the huge rise in foodbanks to see how little support is being given to people who fall on hard times. But instead of recognising the tremendous difficulties people are facing, ministers are blaming them for their plight. The Chancellor is talking up a recovery – but for who? These new figures show that despite trying desperately hard to make ends meet hundreds of thousands of people still can’t afford to put food on the table for their families. Welfare reforms like the Bedroom Tax have pushed more households into food poverty.”

The long term picture is no better. A study by SCVO showed that one in four Scots will be living in poverty by the end of the decade if the coalition government forges ahead with “criminal welfare reforms” that draw together a range of benefits into one universal credit.

A common myth perpetrated by the UK Government is that welfare is for skivers. In fact the biggest element of social security expenditure (42%) goes to pensioners. Then housing benefit is next, accounting for 20%, of whom one-fifth are in work. Then 15% goes on children, through child benefit and child tax credit. Some 8% goes on disability living allowance, 4% on income support mainly for single parents and carers, 4% on employment and support allowance to those who can’t work due to sickness or disability, and 2% on carer’s allowance and maternity pay. Just 3% is spent on jobseeker’s allowance.

So if we achieve only one thing this week, let's remember that poverty demeans us all and it doesn't have to happen in a rich country like ours. And if you don't like the moral argument, accept the economic case. More equal societies do better on every measure, so pure self interest should drive you to challenge poverty.