Welcome to my Blog

I am a semi-retired former Scottish trade union policy wonk, now working on a range of projects. All views are my own, not any of the organisations I work with. You can also follow me on Twitter. I hope you find this blog interesting and I would welcome your comments.

Friday, 23 December 2011

PFI is dead - long live PFI!

Scottish Ministers are fond of saying that Scotland is being "set free from the shackles of PFI". Sadly this misrepresents the continuing widespread use of private finance in public infrastructure through a range of PPP models. It's an old trick of political spin to change a name or two, but it's substance that matters.

Despite vociferous criticism of the previous administration's use of PPP/PFI, the Scottish Government is planning one of the largest PPP programmes in Europe. Ministers avoid using the acronym PPP, although officials when pressed do own up.

Instead they refer to NPD (Non-Profit Distributing Trusts). The NPD model is simply a cosmetic change to existing PFI schemes. It retains the higher borrowing costs, private profit at the contractor level and elements of the risk transfer costs all leading to the same profiteering and inflexibility inherent in PFI.

The other rebranding is called the Hub initiative, which uses Design Build Finance and Maintain (DBFM) PPP contracts for „community facilities e.g. health centres, schools, police & fire services. The Hub initiative is based on the English Local Improvement Finance Trust (LIFT) health PFI scheme. Also, waste infrastructure contracts are based on English PFI ones and the National Housing Trust is a form of PPP.

So why are we returning to PPP via this elaborate political spin? To be fair these PPP schemes are better than their predecessors, but that would be true of every private finance scheme as the procurement staff learn lessons, at the taxpayers expense. The real reason is a complex mix of off-balance sheet financing and the relentless chase for the free lunch. Enron economics are alive and well in Scotland.

What's the alternative?
  • PPP/PFI contract buyouts that produce savings. A 2011 SFT review didn't calculate potential savings because, it said, "termination would bring assets back into the public sector for accounting purposes and the capital budget required for this is not currently affordable". In other words Enron economics.
  • Prudential borrowing for health boards to plug the biggest gap in the conventional borrowing regime.
  • Provide a genuine level playing field, with Scottish Government funding support offered to new projects irrespective of the proposed method of procurement.
  • Extend Freedom of Information laws to all companies and other bodies providing public services. The capacity to effectively scrutinise the true costs of PPP is essential.
The bottom line is that every objective analysis and countless parliamentary reports all show that private finance is less flexible and more expensive than conventional borrowing. But weaning politicians off it is proving very difficult indeed.

Thursday, 8 December 2011

Scottish Living Wage

I was giving evidence yesterday to the Scottish Parliament Local Government and Regeneration Committee as part of their living wage inquiry.

It can be argued that there has been a greater focus in recent years on tackling poverty in families with children and older people than those at work. The living wage is a key element in tackling poverty for those at work and the Scottish Living Wage Campaign has been at the forefront of efforts to extend this concept in Scotland.

The living wage is intended to provide a level of pay that adequately allows workers to provide for themselves and their families. The current rate in Scotland is £7.20 per hour. This is paid to staff in the direct employment of the Scottish Government including the NHS. Seven local authorities have adopted the Scottish Living Wage, most notably Glasgow that has also encouraged a wider take up in the city.

This still leaves 18,432 workers (7%) in local councils who are paid below the living wage. There are also around 350,000 workers in Scotland earning below this level including many in the private and voluntary sector who provide public services. For this reason the committee focused in my panel on how we can expand the coverage of living wage.

Some local authorities claim they can't implement the living wage because of single status and equal pay. This is simply an excuse for inaction. The easiest way to implement is by collapsing increments at the bottom of the scale as in NHS Scotland. While this may impact on differentials, it doesn't of itself create an equal pay claim. The other is by a top up payment that might create a theoretical equal pay claim. However, there is a Genuine Material Factor defence that can be objectively justified on several grounds. 

Expanding the living wage to the voluntary and private sector can be done through procurement. Legal advice to government and councils has highlighted the risk of challenge under EU procurement rules. Again there are ways of addressing this following the example of London and other councils elsewhere in the UK.

Finally, all those giving evidence emphasised the importance of establishing a Living Wage Unit. It could promote the living wage, give advice on the perceived barriers and provide practical support to public and private sector bodies that recognise the value the living wage brings to their organisation and the wider economy.

In all a very good evidence session and I hope the committee brings forward some positive recommendations.

Tuesday, 6 December 2011

Scotland and human rights

Last week I attended a lecture and dinner with Shami Chakribarti, Director of Liberty, at the University of Edinburgh. Her theme was 'A man's a man for a'that - Scotland and the Human Rights Act.

Her main point was that it's easy to sentimentalise Scottish, British or "western values" as if they always came easily or as if people around the world don't also strive for dignity, equal treatment and fairness. At a time when many at Westminster seek to replace universal "human rights" with "British rights" or citizens' privileges, she encouraged Scotland not to follow this trend. In this shrinking interconnected world, we should not choose to be citizens somewhere but rather human beings everywhere.

A key target for her concern was the proposed Bill of Rights for the UK, as against the universal rights that were developed after the carnage of the Second World War. She highlighted three specific concerns:
  • Attacks on the European Court of Justice in decisions such a prisoner voting. These attacks fail to understand that the ECHR is now integrated into our system of justice. Not forgetting the irony of attacks on judges from those who preach the rule of law to others.
  • Judges overturning the decisions of elected representatives. Most democratic states recognise that there have to be underpinning rights that protect people against arbitrary law making. Those advocating a Bill of Rights should also recognise that in jurisdictions that adopt this model, judges tend to be much more interventionist and powerful.
  • That we risk only giving legal rights to the 'worthy citizen' as against the principle of equal treatment. Deportation and immigration cases illustrate this point well.
There is a perception, at least from an English angle, that Scotland is more relaxed on these points. A less excitable tabloid press certainly helps and Shami argued that she was optimistic because people across the UK are generally supportive of essential human rights. The problem is a perception that they are OK for us, but perhaps less so for others. Immigration cases reflect this point.

I am not convinced that Scots necessarily take a more positive view than the rest of the UK and I illustrated this with some examples from my own experience of anti-racism work. However, I do believe that we can win the argument that Scots are human beings before we are citizens.

Shami did touch on some topical Scottish issues. A concern that the benign Scottish influence over human rights might be lost if Scotland became independent. Either way she hoped we would support human rights not Scottish rights, whatever our constitutional future. She also warned against 'dangerously broad' definitions of speech offences in the proposed football offences legislation. She accepted that the objectives of the Bill are laudable, but experience of speech offences is that they must be closely defined. The broad anti-terrorist legislation provisions of 'glorifying terrorism' as against the clearer incitement to murder or racial hatred. 

The evening was a timely reminder for me of the importance of our human rights framework. Human rights standards and principles apply to each of us equally. Compliance with these rights should be mainstreamed in the design and delivery of public services. they can be used as a tool to argue for better and fairer services. The work of the Liberty and the Human Rights Consortium Scotland  in highlighting these issues deserves support.

Thursday, 1 December 2011

Politics of the pensions dispute

Last month I posted some reflections on the politics of the current pension dispute. After yesterday's historic strike I believe some update is warranted.

The ConDems got themselves in a guddle from the outset. Firstly, we were told the strike will ruin the economy costing £500m and then it was all a damp squib. Self evidently both cannot be correct. Of course it was only a damp squib if you view the world from the No.10 bunker or your normal social circle of bankers and hedge fund managers. For those in the real world it was an amazing day of protest for pensions justice, as the pictures alone show so clearly. The Autumn Statement the day before just added fuel to the fire.

For the SNP they started with a clear political strategy that deftly avoided the Scottish pensions tax for staff in the LGPS (Scotland) when it became clear there were no Barnett consequentials. They could have used some of the additional £675m efficiency savings to offset the consequentials from the NHS and other schemes. However, they made the political judgement that this money could be better used elsewhere, with the big added advantage of being able to blame Westminster. It will all be fine when we are independent. Treasury 'cash grab' was the soundbite, we actually used this first, but that's fine because that's exactly what it is.

So far so good until Labour MSPs decided to oppose business in Parliament on the Day of Action. The SNP then made a poor tactical decision to hold another debate on pensions (they had one only 10 days before) that meant crossing picket lines. John Swinney, I suspect unintentionally, gave the impression that he was boasting that he crossed a picket line. Then very awkward pictures for the First Minister at the Scottish Parliament picket line. This all went down badly and at the Glasgow rally, when that picture went up, he was loudly booed by most of the 2000+ people present. A rare experience for the normally politically astute FM.

Trade unions broadly welcome the Scottish Government's support for the campaign, but yesterday was about solidarity on the streets and picket lines, not posturing as part of a referendum strategy. A number of mainly West of Scotland SNP MSPs would understand that, but other colleagues clearly didn't.

As for Labour. Well at UK level they started by falling back into the New Labour trap of worrying about being associated with strikes. They just didn't get the scale of this strike and as a consequence sounded like Kenny Dalglish on a bad day - maybe yes, maybe no. In fairness, Ed Miliband redeemed himself somewhat at Prime Minister's Questions.

Scottish Labour generally played a blinder. Ian Gray's measured arguments in favour of showing solidarity went down well on the media and with those taking action. He was supported by many MSP's on picket lines and rallies. Yes, of course the Labour Leadership candidates had an interest in attracting votes, but they didn't make the judgement call. Most of them simply reflected the mood of the Party.

So, the scores at the end of the day. ConDem's nil - didn't even try. SNP 1, for getting the principle but let down by poor tactics. Scottish Labour, full marks for not only making the case, but for being out there showing solidarity when it matters.

Tuesday, 29 November 2011

Autumn statement and Scotland

Not a good day at the office for George Osborne. Up to the dispatch box to tell us that the coalition's main political promise would be broken. The deficit won’t be paid off by the end of this parliament - maybe by 2016-17? Aye that will be right!

Excessive borrowing, the claimed Labour disease, is clearly spreading to the ConDems with £158bn more borrowing over the next four years than it planned a year ago. Cash that won’t even be spent stimulating the economy, instead he will be borrowing to pay for unemployment and lost tax receipts of the newly jobless. The much vaunted growth forecasts have been downgraded by the OBR to just short of another recession.

And what will Scotland get from this dogs breakfast? Well it’s very difficult to see from the 98 pages of the Autumn Statement. Not even a supplementary Barnett consequentials paper on the Treasury website.  The Scotland Office tells us “Scotland will receive an additional £433m in Barnett consequentials for capital projects.” And the revenue consequentials? No one seems to know. Not in the documents. Not in the Scotland Office statement. I understand phone calls from Scottish Government officials to the Treasury have not produced an answer.  So John Swinney is left saying “the Treasury are so far unable to tell so how much our revenue budget is to fall.”  It all gives the impression of a hastily cobbled together plan.

We don’t even get the capital straight away. The nominal figures are £50 million for 2011-12, followed by £68.3 million, £141.9 million and £172.3 million in subsequent years, eventually totalling £432.5 million.

What we do know is there’s plenty of other bad news in the Statement for Scottish workers and their families:

·         Raising the state pension age to 67 by 2026. Further proof you can’t trust this Government on pensions.

·         More public sector job cuts. 710,000 across the UK and that could mean around 70,000 in Scotland

·         A public sector pay cap of 1% for the next two years when inflation is topping 5%. The cumulative effect of 2 yr pay freeze, 2 yr 1% pay cap + pension contributions increase will be a 16.48% pay cut in public sector.

·         Looking at Regional Pay so he can give ungrateful public sector workers in the most deprived regions of England and Scotland a further pay cut.

·         Promised increases in Child Tax Credit abandoned.

·         Creating further job insecurity by undermining employment rights on unfair dismissal, redundancy and TUPE.

·         And if you still have a job you are more likely to die at work when health and safety rules are abandoned.

In essence the UK Government is planning to borrow £billions to keep workers on the dole rather than investing to get people into work and growing the economy. Even those in work will be less willing to spend when they see what’s coming.

On the eve of the probably the largest strike the UK has ever seen – the priorities of this Government are very clear for all to see.

Thursday, 24 November 2011

Labour Leadership

Ballot papers will start dropping through members letterboxes this week for the election of a Leader and Deputy Leader of the Scottish Labour Party. This is an important election as it will be the first leadership team to be elected as party leader in Scotland, rather than simply leader of the MSP group. In addition, after last May's election defeat, the Scottish Labour Party leads to take a new direction to win back the support of the electorate.

There are three competent candidates for each post, but I will be supporting Johann Lamont for Leader and Ian Davidson for Deputy.

My reasons are primarily the same for both candidates. The Party needs more than simply a competent front person. We have done with New Labour, the 'what works' presentation above substance politics. We need leaders that imbue Labour values, not simply a smart soundbite.

It is not an accident that almost all the trade unions in Scotland back Johann and Ian. Trade unions don't operate in the political bubble. They represent workers who have made it very clear that they want political leaders who stand up for workers in their current struggles. Johann and Ian are the candidates with a proven track record of promoting Labour values. 

And record is important because it is easy to make promises in an election. Endorsements like Maria Fyfe and senior union women for Ian Davidson shows that he has walked the talk for fair representation in the party. He has been on the marches, the picket lines and taken forward the cause of working people in Parliament. Johann has a similar record on a range of causes and has the backing of respected politicians like Hugh Henry

That's not to say that we will agree on everything. I have had many a policy disagreement with both Johann and Ian. Pretty robustly on occasions too! But these have always been tactical differences - I have never doubted their underlying values.

They also understand the need for change. Not just as an easy slogan, but because they understand why we lost support and what we need to do to rebuild trust.

As a senior union official, SEC member and as a former Chair of the Scottish Labour Party I have worked with many politicians, through good times and bad. I can tell you that Johann and Ian are the real thing and that's why I will be voting for them.

Wednesday, 23 November 2011

Nordic inspiration

Comparisons with Nordic countries are in vogue with the Cabinet Secretary for Education recently extolling the merits of the Swedish free schools. Looking to Scandinavia for public policy inspiration is very worthwhile and the work of Nordic Horizons and others is important in promoting a dialogue. These countries are of similar size and geography to Scotland and share at least some common attitudes and cultural links.

Last week I was giving a presentation to a visiting delegation of Norwegian trade unionists on the Scottish health and social care system. This was a privilege because we usually look to them for inspiration. For example, the Norwegian health service has a much better staffing ratio per head of population than Scotland. They also have a genuinely ‘local’ council structure, serving real communities rather than our historical compromises. Of course their greatest achievement is a more equal society that delivers better outcomes in almost every measure.

This visit was one of a number of similar trips by Norwegian unions to Scotland in recent years. They are concerned that market principles are invading their public services, largely based on the English model promoted in the New Labour years and taken to new lows by the ConDems. They come to Scotland to learn how another small country has taken a different path of public service reform based on cooperation not competition. I was able to give them an historical overview and update them on the work of the Christie Commission that again sets a very different course from other parts of the UK.

Interestingly, they were less than impressed by the Swedish free schools and pointed to recent studies that question how effective they have been. The number of low performing pupils has increased since the free school system was introduced. They regard this as a good example of how market principles are undermining the success of the Nordic approach in creating and maintaining a more equal society. It is equality that makes the difference and this is reflected in UK studies that show that school systems are less important than social class determining positive education outcomes.

I would therefore look to Finland instead of Sweden where they combine the highest levels of attainment in the OECD‟s Programme for International Student Assessment (PISA) and have “high and consistent performance standards across the entire education system”. It is important to note though that Finnish success in world education rankings is not just about their school model. It is a country that values social cohesiveness. Finns pay relatively high taxes which provide the money for high quality services which all contribute to the well being of their children.

So while we should continue to take inspiration from Scandinavia, we should remember that some developments there are driven by the same neo-liberal policies that have caused so much damage in the rest of Europe. I wonder if Mike Russell would be as keen on free schools if he fully appreciated the link to the English market reforms? Well he might, but the rest of us should be more wary.

Saturday, 29 October 2011

Politics of Pensions

I was speaking at a fringe meeting on pensions at today's Scottish Labour Party conference. Thanks to CfS for organising it.

I have previously explained why we are balloting members on pensions. In essence most of our members across the UK are being asked to pay more, work longer and get a smaller pension. As today was a political event, I focused on the politics of pensions.

Let's start with the Hutton report on public service pensions. Now in fairness to Lord Hutton there are a number of positive points in his report. In particular he buried the myth of the 'gold plated' pension, promoted by Nick Clegg, and argued for bringing private sector pensions up, rather than bringing everyone down. Other recommendations on governance and the factual analysis that shows pension costs declining have been helpful. Other issues like the 50% increase in contributions were formulated by the UK Government, not John Hutton.

However, I still wonder why he took the job. He was after all in the Cabinet that reached a UK deal on public service pensions in 2007/8. He then said he thought that deal did not go far enough and it was better he did the review that the usual Tory place person. Sadly, this is a classic New Labour approach to politics. Little grasp of political values and a 'what works' approach to policy. Little grasp of the political context that the Tories would use pensions as part of their ideological attack on public services. The report was also laced with other New Labour mantras, including ending access to public service pension schemes for workers who are privatised. Plurality of public service provision is more important than decent pensions.

So what about the current Labour leadership. Well I might not have agreed with Ed Miliband's position on the civil service dispute in June, but I could at least understand it. Negotiate before striking is what we do all the time. However, that is no longer the position. No reasonable observer could fail to recognise that we have been attempting to negotiate for months with a government that is simply not interested in meaningful negotiations. Ed did make the right decision in joining the TUC march in London and he should now make the correct call here if the trade unions take action on 30 November. Labour needs to be seen on the side of workers who are only seeking to protect their hard earned pensions. I was very pleased to hear all the candidates for Leader and Deputy Leader at the hustings this afternoon support the pensions justice case and give their backing to the ballot.

And the SNP position? Well unlike the UK government they couldn't blame the previous administration, because they were in power when the pensions deals were done in 2008. John Swinney's signature is on the LGPS (Scotland) agreement and I don't believe he wanted to backtrack, he is in my view a man who sticks by his word. He also well understood that whatever the temptation to levy unecssary contribution increases on workers covered by the LGPS scheme, this would rightly be viewed as a Scottish pensions tax. To do the same for the other schemes would have taken a significant chunk out of his declining budget, so he decided to bow to Westminster. He could have used the very large, and unbudgeted, surplus in efficiency savings. However, I believe politics took over here and the Scottish Government took the political calculation that they could spend the money to greater political effect elsewhere and blame the increase on Westminster.

So public service pensions is first and foremost a dispute with governments over an essential term and condition of service. Our members pay significant and growing pension contributions for their retirement. They do the proper thing in providing for them and their families. Unlike many private sector bosses who expect the state to pick up the bill while they profit and pay themselves massive pensions.

But it also has a very clear political context. It is part of the ConDem coalition's ideological attack on public services, reflecting their political values. For the SNP it is an opportunity to say again that it would all be fine if we were independent. The Labour leadership also has to stand up and be counted as being on the side of workers in struggle. No New Labour style woolly words or equivocation on this one Ed. Millions of workers expect better.

Friday, 28 October 2011

Top Pay Scandal

I was a guest on the BBC's 'Call Kaye' programme this morning discussing the 49% increase in directors pay. Rightly, there was a lot of anger at this outrageous abuse of power. I almost felt sorry for David Watt from IoD Scotland who usually gets wheeled out to defend the indefensible.

My opening point was that a time when our members are suffering a pay freeze and attacks on their pensions, they would welcome a pay rise in line with inflation - 5%, never mind 50%. These directors are same people who want to end unfair dismissal rights and cut workers pay and pensions in the public and private sector. They have no shame as they get together to award each other pay, bonuses and massive pensions.

I also had the opportunity to correct some myths.
  • There is no real link here with performance. CEO pay has quadrupled in the last ten years, while share prices have fallen.
  • No they won't be poached by overseas companies. Only one FTSE 100 CEO has been poached in this way in past 5 years, and that was by another UK company. 60% of appointments are internal and turnover is only 6% - half the national average.
  • They won't move overseas. We were told a few weeks ago that banks will move to the Cayman Islands. Well I would like to see their taxpayers finance the next bailout.
A number of callers referred to the culture of short termism and that is a contributory factor. But this is also a failure of moral leadership. Between 1949 and 1979 top pay actually fell as a proportion national income. After 1979 it has been going in the opposite direction. The post war generation of leaders has been replaced by greed and avarice. Individualism and wealth, the Thatcher values, have been promoted over any sense of fairness or decency. CEO's now earn 145 times average wages. If we continue as we are that will rise to 214 times average wages by 2020.

So what are the solutions. Capping wages, possibly as a multiplier of the lowest pay would be one solution. Progressive taxation is another. The High Pay Commission is looking at some structural solutions including:

Transparency: more publicly available information and meaningful disclosure.
Accountability: how pay at the top can be made more accountable through reforms of the Remuneration Committees and the inclusion of other stakeholders.

Fairness: The British public have a deep and ingrained sense of what is fair. When it comes to pay at the top, this is fundamentally about playing by the rules. Need reforms that could engage greater fairness in relation to pay.

It is that last point I would finish on. This isn't just an issue for the companies concerned and their shareholders. It is an issue that affects us all. We know that more equal societies to better on almost every measure. Top Directors pay is an important part of the drift towards a less equal society in the UK, and we are paying a big price for not tackling this issue.

Monday, 24 October 2011

Health & Safety Week

This is European Health and Safety Week when we seek to raise awareness of workplace health and safety.

This year's events take place against the background of the UK Government slashing the budget of the Health and Safety Executive and planning to dilute existing legislation to remove the allegedly "unfair burden" on business. We have heard plenty of similar nonesense from Euro sceptic Tory MPs today. When they talk about the burden of EU regulation, they mean issues like health and safety. After the banking collapse you would have thought MPs would have learnt some lessons about the importance of regulation.

The minister concerned has been keen to meet with representatives of big business. However, he has repeatedly snubbed the families of those killed due to employer negligence. The campaign group FACK accuses the minister of downplaying the cost of health and safety failures while inflating the cost to business of compliance with safety laws.

They write: "Your answer to a parliamentary question from Ian Lavery MP in June put the cost of health and safety failures at £20 billion per year. This is the bottom end of a £20-£31.8 billion HSE estimate, based on 10-year-old prices, but does not include the cost of cancers and other long latency work-related conditions which would add another £20 billion at least. What you do not explain is that the negligent employers who fail to take health and safety seriously and comply with the law bear less than 25 per cent of the cost of their actions, exporting the 75 per cent of £40-£50bn cost per year on to the whole economy - a tax on good employers and all of us alike."

More than 1.2 million people currently at work have health problems caused by their jobs. The problem is not just bad employers using health and safety as an excuse but the UK government using safety myths as a reason for cutting back on regulation, enforcement and guidance.

The Wednesday of European Health and Safety Week has been designated "National Inspection Day" when all safety representatives are asked to inspect their workplace. This not only helps make our workplaces safer , but also raises awareness of safety at work. Given the direction of travel of the UK Government on safety, we will need to redouble our efforts to safeguard the workplace.

Friday, 21 October 2011

Local government reform

I was speaking at our fringe meeting at the SNP conference today. The theme was public service reform. I set out the key recommendations of the Christie Commission and the Scottish Government's response, in the context of the major challenges facing Scotland's public services. I then focused on the implications for local government.

There is legitimate concern over the future of local government. Services are going away from local democratic control including police, fire and possibly social care. In addition we have services being transferred to a variety of trusts and other arms length organisations. Plus some privatisation initiatives. This has major implications for the remaining services and creates a confused pattern of service delivery. Unless action is taken we are heading for a 19th Century service delivery model that local government was established to sort out.

There is also a clamour for council mergers on the premise that economies of scale will be achieved. I questioned this premise. There is no evidence that larger councils are more efficient or more effective. They are also more remote from local communities. We should remember that Scotland has the smallest number of councils and councillors per head of population in Europe. Far from being over governed, our councils are already large by international standards.

So the position of local government is hardly secure. However, the reform agenda also has opportunities for local government. The key recommendation in the Christie Commission report is local integration of services through community planning. Councils have an opportunity to lead this process and become the leader of public services in each community. A less publicised Christie recommendation was the development of a 'single public authority' model. The island authorities are already seriously looking at this option and it could have wider application.

So local government needs to speak out strongly with politicians, staff and users making the case for strong democratically accountable councils. Projecting a new vision into the public service reform debate.

Wednesday, 12 October 2011

Pensions Ballot

UNISON members in Scotland are beginning to receive ballot papers asking them to vote for industrial action to protect their pensions. The ballot closes on 3 November 2011.

As the lead negotiator for pensions in Scotland I have been closely involved in this issue and have met many members in meetings across Scotland. Pensions can be a complicated but the key issues are relatively straightforward. The issue is made more complex in Scotland because we have separate pension schemes that are regulated by Scottish Ministers. Primary pensions legislation is reserved to UK Ministers.

Firstly, UK ministers want to increase pension contributions by 3.2% of pay on average. That's nearly a 50% increase. Scottish Ministers are passing this increase on to NHS staff because their budget will be docked if they don't. They could have used the additional efficiency savings delivered by staff  to pay for this, but decided not to. They are not increasing contributions for those staff covered by the local government scheme (LGPS) because their budget is not affected by the changes in England.

The most important point to understand is that not one penny of the money raised goes into pension schemes. It is simply a cash grab by the Treasury. The NHS schemes across the UK are £2bn in surplus each year and the Scottish LGPS funds are very healthy. UK Ministers keep saying that people are living longer so we need to pay more. Yes we are, although not as long in Scotland, which sadly is one of the reasons our funds are in better shape. But longevity is covered by agreements reached as recently as 1998 and 1999 in Scotland that allow for contributions to rise to cover real cost increases like this.

Secondly, we have recommendations from Lord Hutton that will mean staff working longer for less pension. Now some staff want to work longer and others have little choice because their retirement income in insufficient. £4,000 p.a. is the average local government pension. However, a blanket retirement age does not reflect the wide range of jobs covered by these pension schemes. A normal public service career was 40 years. Now that will eventually be going up to 50 years, and probably longer. Just think of the range of public service staff you engage with and reflect if 68 is reasonable for all of them.

Like much of Lord Hutton's report it is not the recommendations that are wrong but rather UK Ministers adding to them. He recommended a move from final salary to career average schemes. Now you can make a case for career average schemes, but UK ministers are using this as an opportunity to cut the value of pensions. Almost all the options they have tabled involve accrual rates that would result in smaller pensions on retirement.

It is the case that Scottish Ministers have not taken a position on the Hutton recommendations and the UK add ons. We have asked for assurances on these points, but have not received them as yet. However, we have seen a letter from the Treasury to Scottish Ministers on this point. That letter strongly implies that UK Ministers are planning to use their reserved powers to impose changes on Scotland. 

Thirdly, UK Ministers have imposed cuts in all Scottish pension schemes by changing the indexing of pensions from the RPI to the CPI. This will result in an average 15% cut in retirement pensions. You pay into a scheme all your life only to see it cut when you come to claim it. If this was a private company you could sue for breach of contract.

So these are the three main reasons for the current dispute. For our members in the NHS the issues are immediate and clear - pay more, work longer, get less. For LGPS members the issues are longer term. But of course pensions are a long term investment and this ballot is about protecting those long term benefits. 

Public service workers in Scotland are suffering from a pay freeze, attacks on terms and conditions, cuts in services and jobs. Our members understand that this attack on their pensions is the final straw. Enough is enough.

I have been a trade union negotiator for more than thirty years. You have to make judgements about when the people you are negotiating with are serious about reaching agreement. UK ministers are clearly in the business of taking money from our members and handing back an even poorer pension in return.

We will of course use every avenue to reach a negotiated agreement. But now is the time to support those negotiations with a big YES vote in this ballot.


Friday, 7 October 2011

Public service reform and the workforce

I was speaking at the Holyrood conference today - Roadmap for Change: Making Christie a Reality. A very good turnout for one of the better conferences on this issue.

My comments focused on workforce aspects of reform. Given the staff intensive nature of public services you might think that the workforce would be a key feature of government strategies. Sadly this has been far from the case over the years, with the workforce being an afterthought in a related HR strategy.

The Christie Commission report and the Scottish Government response is different. They make the workforce central to reform. The workforce is one of the four 'pillars' of Scottish Government reform plans.

Of course we shouldn't get too starry eyed about  this. There couldn't be a more difficult time to engage the workforce. A pay freeze, 21,000 job losses, undermining terms and conditions and of course the current attack on pensions. Public service workers didn't cause the crisis but they are paying the price.

Those staff who are left are being spread more thinly trying to deliver services. So it is important that there is some focus on their needs. Christie recommendations included:
  • Strengthening the public service ethos
  • Workforce development
  • Involvement in designing and improving their jobs
  • Improving the level of autonomy and empowerment
There are two contrasting approaches to workforce involvement in public service reform in Scotland today. A consultant led, top down, one size fits all approach - what I would describe as "one I prepared earlier". The other is a bottom up design of services involving staff and service users. The Systems Thinking approach championed by John Seddon is a good example of this. The former is exemplified by back office factory shared service solutions. Ironically the very approach championed by the sponsor of today's conference - Deloittes. Although interestingly it didn't appear in their presentation!

The bottom up approach can be implemented locally, but other issues need a national approach. These include:
  • A common competency framework
  • Interdisciplinary training
  • Partnership industrial relations
  • Job security
  • National frameworks on procurement, organisational change, pay and pensions.
Change is always difficult but involving the workforce and their trade unions at an early stage is essential to effective change management. There are good examples of this in Scotland, but as in other aspects of reform - others have a long way to travel.

Tuesday, 4 October 2011

Climate change

I was speaking at the STUC Climate Change Conference in Edinburgh today. My theme was Climate change: from law to action.

For the benefit of the climate change deniers I started with a brief recap of the climate change science evidence. The Guardian does a great interactive guide. For Scotland it means our temperatures have risen in every season over the past 40 years, we are 20% wetter with a shorter snow season and fewer frosts. So Scotland gets a bit warmer - not many complaints likely over that! However, it also means an increase in extreme weather events like heat, drought and rainfall, plus a sea level rise of between 10-18cm by 2050. This all has serious consequences for public services, markets, business and health.

For these reasons Scotland has adopted the strongest climate change legislation in the world. Targets to cut emissions by 42% by 2020 and 80% by 2050, together with annual targets of at least 3% per year. These targets are backed up by mitigation and adaptation strategies and a commitment to sustainable development. All public bodies have a duty to tackle climate change by assessing their impact and influence, taking action and measuring progress. Sadly the guidance is a bit weak with no statutory reporting and a very top down approach.

This is why we need to keep campaigning. Scotland is fortunate in having a powerful campaigning coalition on this issue in Stop Climate Chaos Scotland with a collective membership of 2 million. Targets are fine but they are beyond normal political cycles. So we need further steps on issues like green procurement, energy efficiency, transport and just transition strategies. The recent Spending Review prioritised roads over public transport and housing. So we need to keep Government on its toes. Targets are being met, but that is more due to the economic downturn than practical action to tackle climate change.

Next year's local government elections is a good opportunity to put some focus on local actions to tackle climate change. Too many  councils put the Climate Challenge plaque on the wall and do little else. They should all build emission cuts into their Single Outcome Agreements and the work of their Community Planning Partnerships. They should have local targets and adaption strategies that they report on annually. Sustainable development education should be undertaken in all schools together with Food for Good policies in all catering facilities. Waste management and energy conservation should be part of these strategies together with support for public transport, cycling, pedestrian facilities and access to land.

All public bodies and employers should recognise that more than half of all emissions are work related. Workplaces produce ten times as much waste as we do in our homes. That's why engaging workers in climate change is essential. Heroic leadership is not enough. Unions like UNISON have Green Workplace strategies that can help raise awareness and take important practical steps. Workers engaged in these strategies are also more likely to take them into our communities and the home. It can also cut waste at a time when the public pound is being stretched beyond breaking point.

So strong legislation with ambitious targets is great. But let's not get complacent. We need practical actions to deliver these commitments and really tackle the most serious threat to the planet.

Tuesday, 20 September 2011

Spending Review choices

John Swinney MSP will present his spending plans for the next three years to Parliament tomorrow. It is unlikely to make good reading. So here are a few things UNISON members should be watching out for.

The context of course is the UK ConDem coalition's ideological attack on public services, dressed up as a deficit reduction plan. This means a further real terms cut in the Scottish budget, just at a time when the economy needs public spending the most. However, that doesn't mean that John Swinney doesn't have choices, they may not be easy ones, but choices there are.

The first thing we will be looking for is the choices he will make on public service pension contribution increases. The UK government is docking around £240m (recurring revenue) from his budget over the next three years in anticipation that he will enforce a 50% increase in the pension contributions of staff in NHS Scotland, teachers and others. The UK government wants him to do the same in the Local Government Pension Scheme, although there are no Barnett consequentials if he refuses. If he does increase contributions in the LGPS, this will be a 'made in Scotland' pensions tax. No point blaming the big boy down south on this one.

Next is public service pay policy. This is the second year of a real term pay cut for public service workers in Scotland. If that was to be continued for a third year it will add up to a double digit cut in living standards. For all the talk of cuts it is important to remember that the wage freeze has made the biggest contribution to the savings pot.  I suspect we will hear more about the 'social wage' and in particular the 'benefit' of the Council Tax freeze. This won't wash as this tax freeze benefits the wealthy home owner, not our low paid members. It also costs jobs and services.

Then we have the impact of the budget on jobs and services. Even with some protection for the NHS budget, inflation and increasing demand will still result in health cuts. The Non-Departmental Public Bodies faced far bigger cuts than the average last year and they will be concerned again. However, it will be the local government budget that will merit most scrutiny. The Council Tax freeze means they have no local flexibility and they are also facing increasing cost pressures. John Swinney may wish to incentivise reforms with financial sticks and carrots, and this may make it difficult to compare budgets. Watch out for some smoke and mirrors under this heading.

We should of course remember that none of this pain is necessary. It is low paid workers and communities who are again paying the price of corporate greed. It beggars belief that the cheerleaders for corporate greed, the CBI, are calling for more services to be handed over to them in this morning's Scotsman. Have they not done enough damage?

There are few easy choices for John Swinney tomorrow. But choices there are.

Wednesday, 14 September 2011

Local Government in Scotland

I gave evidence last week to the Scottish Parliament Local Government Committee on what I believe are likely to be the key issues facing the service in the coming year. In my view the agenda is dominated by the financial position and I categorised the impact into three strands:

The Scottish Government allocation to local government this year was cut by 2.6%. But that is only the start of the story. Increasing demand, inflation and the recession means that councils have had to cut even further. We have identified £535m of cuts with 12,600 job losses across Scottish local government. These aren't projections, they are real cuts.

The economic impact of that is substantial with, according to the Treasury model, at least another 13,000 jobs lost in the private sector as a consequence. 70p in every pound spent on local government wages is spent locally. And for every job loss the state only 'saves' 8p in the pound.

Most service cuts so far are being achieved by salami slicing from services. Fewer staff are struggling to deliver the same services and that is resulting in delays and a diminution in service quality. The recent Audit Scotland report highlighted some of the impact this has on staff and service delivery.

There are positive reform initiatives and many of these approaches are identified in the Christie Commission report. However, the financial position is such that some councils are scrambling around looking for any proposal that might make savings, however ill thought through. The Edinburgh privatisation programme and the Clyde Valley shared support services are two topical examples.

Care procurement is another. We are seeing a race to the bottom in wages, conditions and quality of service. The Scottish Government's social care procurement guidance is very poor on workforce issues and even ignores their own statutory guidance. Integration is all very well but it is meaningless if you have a demoralised workforce.

We should not lose sight of the impact of UK Government reforms. In particular housing benefit changes that will undermine housing finance and cause administrative chaos.

All of this leads to a real concern over the future of local government in Scotland. The centralisation of police and fire simply adds to the growing quango state at the expense of local democracy.

The biggest contribution towards the financial cuts has come from the workforce. In local government there is a pay freeze without the modest underpinning for the low paid that happened elsewhere. Progress on the living wage has also been patchy.

Now those same members face an unprecedented attack on their pensions with a 50% increase in contributions. In return they will get worse benefits and be expected to work longer. And no, I am sorry, but the Council Tax freeze doesn't make up for that.

All of this adds up to a toxic mix with a demoralised workforce struggling to deliver essential services. There is a better way.

Wednesday, 7 September 2011

Legislative programme

Some grand rhetoric in Parliament today with the unveiling of the Scottish Government's legislative programme. Lot of words, if not huge detail, in the 63 page document. Here are some highlights.

Workforce Issues
Unusually for a legislative programme there is quite a lot about the public service workforce. It confirms the policy of no-compulsory redundancies until March 2012, although that doesn't cover local government. There is an attempted 'social wage' trade off between pay restraint and  benefits including the frozen council tax, living wage, prescription charges and concessionary travel. This frankly doesn't wash with most public service workers particularly as many don't get the underpinning £250 for the low paid or the Living Wage.

The Council Tax freeze is particularly contentious. They claim “Analysis shows that, as a percentage of their income, households in the lower end of the income distribution benefit the most, on average, from the freeze in council tax.” This is a highly skewed statistic. The saving at Band A is £147pa compared with £441pa at Band H, therefore the richest households benefit more from this tax cut. Not to mention the jobs and services  lost to pay for the freeze.

The FM was a bit vague when questioned about pay policy during the election and we expect this to be clarified as part of the Spending Review later this month. “We will continue to set public sector pay in a way that is fair and helps sustain public sector jobs and protect public services in the face of deep budget cuts from Westminster.” Is just so much rhetoric if they continue a pay freeze.

Public services
A Cabinet sub-committee on public service reform “has been convened to shape and take
forward our response to the Christie Commission in a coordinated manner. The Spending Review, to be published later this month, will express our continued focus on driving reform and value for money throughout public services.”

Sections on integrated working, local partnerships, outcomes and preventative spending, essentially appear to implement the key Christie recommendations. There is also support for the Christie proposals on workforce development and in particular the concept of workforce engagement. 

Again reflecting Christie on structural reform; “Where structural reform is required in order to achieve the required outcomes and value for money it should proceed, but leadership and culture matter more than structure.”

There is reference in the list of Bills to a Freedom of Information Amendment Act. There is no explanation in the text other than it is intended to “add strength and clarity to the Act”. As the government has previously ducked extending the Act, we should be wary about what is meant by 'clarity'.

A strange mix of economic proposals. The Tory Enterprise Zones are to be imported to Scotland, despite previous experience that these simply move jobs around. Mind you I suppose that is at least consistent with the Corporation Tax strategy! Similar pandering to the business lobby over 'better regulation' and the Small Business Bonus Scheme. This is apparently "very successful", without a scrap of evidence that it has created a single job.

The hydro nation concept is to be delivered through a water bill. This looks promising as is the idea of a strategic body rather than simply handing new roles over to Scottish Water. Again more detail needed, but looks as if it is moving in the right direction. 

Housing investment took a big hit in this year's budget and so we should be wary about the plan to abolish the Housing Support Grant. It looks as if it is another way of spreading limited cash even more thinly. However, the government should get credit for the modest council house building programme. Even modest is an improvement.
Health & Care
On the day that ConDem MP's voted to dismantle the NHS in England, it is welcome to see the Scottish Government “hold firm to the values of the NHS, which are so important to the people of Scotland. We will foster a mutual NHS, working competently and collaboratively to deliver healthcare which is free at the point of need. We shall not go down the route being pursued in England.” Gold star for that commitment.

Same applies to partnership working as “NHS Scotland staff will continue to be fully involved in shaping the future NHS, benefiting from partnership arrangements which are the envy of many, within and outwith Scotland.”
On care integration it appears that the Government will focus initially on older people, "This will require, amongst other things, delivering the integration of health and social care and improving joint working with other agencies and the voluntary sector. We are determined to ensure that the older person is the central focus of delivery the length and breadth of Scotland.” Again a lot of detailed work is required and I understand we will hear more on this later this month.
The Social Care (Self-directed Support) Bill will need some scrutiny. This is fine for appropriate groups, but it mustn't become the new 'one size fits all' policy. It is already being used to cut social care in a number of areas.
The Alcohol Bill will be reintroduced “bringing minimum pricing as a condition of licences granted under the Licensing (Scotland) Act 2005 with the actual minimum price being specified in subordinate legislation." We certainly have to do something to reduce alcohol consumption in Scotland and reduce the impact that alcohol misuse and overconsumption has on public health, crime, public services, productivity, and the economy as a whole. There will still be scepticism that this is the right approach, but as the UK government is unwilling to act on excise duty, it may be worth a try.

More rubbish on the claimed “additional 1,000 police officers on the beat in Scotland.” This is nonsense as many of these officers are far from “on the beat” - they are substituting for police staffs. It is hard to take the Government seriously on 'outcomes' when they persist with this policy.
Then we have a Bill to create a single Scottish Police Service and a single Fire & Rescue Service. “Our priority will be to ensure policing remains strongly rooted in and responsive to our communities, and that front line services are protected despite the financial challenges.” The paper claims this is consistent with Christie recommendations although it is hard to see how. These services are typical command and control cultures that don't do devolved management well.
The only bright point in the dismal Justice section is support for community alternatives to short term prison sentences for minor offences and the Community Payback Order (CPO). We really must do something to cut the appalling waste of the ever rising prison population. We will have to see if the Spending Review includes the promised "provision of realistic levels of funding.”
We should welcome the emphasis on Climate Change legislation and assessment of the carbon impact of proposed expenditure. Scotland may already be "more than halfway to meeting our 2020 target of a 42% reduction in emissions.” How much this is due to the recession is questionable and there is limited action on public duties. However, we should welcome the continuation of the Climate Challenge Fund "with an enhanced level of funding of £10.3 million in 2011-12."

Education & Children’s Services
If we are serious about preventative spending we need to invest in early years. There are a number of initiatives that expand provision and develop the early years workforce. A welcome move away from the obsession with nursery teachers. There will be new legislation on the rights of children and young people and consultation on a draft Children’s Services Bill for introduction later in this Parliamentary session. There will be an Early Years Change Fund “to deliver effective early intervention in a child’s life, including the development of a new generation of children and family centres across Scotland and support for families in crisis.” That looks promising and appears to build on the work done by Susan Deacon.
There will be a Pre Legislative Paper on Post-16 Education in September 2011. We should welcome the commitment to free higher education and a guarantee that all 16-19 year olds will get a place in post-16 learning. Maintaining the Educational Maintenance Allowance and “implement our new Careers Strategy with more and better support for those who need it most.” I would be sceptical about aspects of this careers strategy as so far as it is too reliant on web based services. But let's wait and see.

In the current budgetary environment it was always going to be a difficult programme to put together. It is a bit of the curates egg, good in parts, but plenty to scrutinise when we see the detail.

Wednesday, 31 August 2011

Bankers at it again

The bankers and their big business allies at the CBI are at it again - lobbying against regulatory reform of the banking system. The proposals, due to be published on 12 September, are aimed at ensuring taxpayers are not liable for any future losses or bank collapses, including ring-fencing banks' retail operations.

CBI Director General John Cridland said taking action now could starve businesses of the capital they needed and damage the economic recovery. However, Business Secretary Vince Cable has said the reforms will go ahead. He described the CBI's line as "disingenuous in the extreme. Banks are in a way trying to create a panic around something which they know has got to happen".

The 'spivs and gamblers' as Vince cable once described them are at it again. The only amazing thing is that these reforms have not already been introduced. The banking crisis was in 2007 and if you read the Treasury's response, it sounds like the CBI might get a better hearing there. 2015 or later for legislation?

The US at least has the Dodd-Frank Act. Even that was watered down by the usual suspects bemoaning the increase in regulatory powers, claiming it should all be left to the market. Even Adam Smith and Milton Friedman turned away from “free banking” to support, albeit limited, financial regulation and legislative reform in the wake of banking crises in their lifetimes. Smith’s views were influenced by the 1772 crisis and the failure of the Ayr Bank in Scotland. Friedman’s views by the U.S. banking crisis of 1930–1933.

Others predicted the resistance to change. Joseph Stiglitz in his 2009 book 'Freefall' used the plumbing analogy (p295):

"We called in the same plumbers who installed the plumbing - having created the mess, presumably only they knew how to straighten it out. Never mind if they overcharged us for the installation, never mind that they overcharged us for the repair. We should be grateful that the plumbing is working again, quietly pay the bills, and pray that they do a better job this time than last."

In the afterword to the paperback edition he called the Dodd-Frank Act a "Swiss cheese bill - seemingly strong, but with large holes." The man certainly knows how to use the English language! He also correctly predicted the "rewriting of history" that the usual suspects have been busy at in both the UK and USA.

I will leave the final word to David Hillman, of the Robin Hood Tax campaign:

"An out of control banking sector is no basis for economic recovery. Banks should be made to pay for the damage they caused and not be allowed to repeat the mistakes of the past. We must not be deterred by bank lobbyists whose idea of 'economic recovery' means increasing bank profits. We can protect jobs and help those hit hardest by the financial crisis if we ensure banks pay their fair share back to society."


Tuesday, 23 August 2011

Scottish Studies

The announcement by Alasdair Allan, Minister for Learning and Skills that a new topic, Scottish Studies, is to be taught in schools has caused a lot of debate. Maybe because it is the media silly season, after all Mike Russell made a similar statement in June without quite the same level of interest.

Alasdair said research showed there was widespread support for the plan, which he said would correct an “abnormal” situation where Scottish history and literature was not routinely taught. “You would anticipate that there would be a wide variety of material about Scotland made available in Scottish schools, but it has to be said that, although things have been getting much better, many people’s experience is of learning not much about Scotland.”

I have to say that I fully agree with that. Interestingly, similar points have been raised in England about how little of their history is taught in schools. Whilst we should of course learn about international history, that doesn't mean our own should be marginalised. I was fortunate to have an wonderful history teacher who gave me a lifelong passion for the subject. Others have not been so fortunate.

For those who view this as a nationalist plot, if it is, it could backfire. In my experience many Scots have a very romantic view of Scottish history, full of heroic myths that sadly are rarely true. The Wars of Independence, Jacobite risings and others are widely seen as Scotland v England matches, when the reality was much more complex. Teaching history properly can only improve our understanding of the past and move away from simply viewing Scotland as, that country that isn't England.

There is also a lesson for some politicians. Knee jerk reactions that it is all a nationalist plot is just not clever politics. It just plays negatively and turns the voter off politics. The research showed widespread support for the idea and a simple vox pox with friends would confirm this. Of course there is a political motivation, but that doesn't automatically make it a bad idea. My advice - take a deep breath next time you are invited to do a media reaction interview.

Wednesday, 17 August 2011

Corporation Tax

The long awaited Scottish Government paper on devolving Corporation Tax has been published. It has been some time coming given the FM raised the issue in May and this is a long standing SNP position.

UNISON Scotland is not only a strong advocate of devolution, but we would generally be regarded as in the 'devolution max' camp. This is reflected in our evidence to the Calman Commission and elsewhere. However, we have opposed the devolution of Corporation Tax and I can see little new in this new paper to justify this proposal.

So what are the problems?

  • The bottom line is that there is little evidence that cutting taxes on business creates new jobs. If there is a link, it is marginal and there are more cost effective ways of using the same money to create more jobs. Most of the savings are likely to go into big company profits and shareholders pockets.
  • Like the UK Government's enterprise zones, at best this might displace jobs from one part of the UK to another. Turning Scotland into some type of tax haven is not the basis for a strong economy with real jobs. At worst it will simply lead to 'brass plating' were companies notionally move their headquarters to Scotland, but no real jobs are created.
  • Devolution of taxation is not a free lunch because there will be a corresponding cut in the block grant. Northern Ireland estimates have just increased to £400m and it would be much more for Scotland. The Treasury estimate is £2.6bn although I agree with the Scottish Government that this is an over estimate, but still around £800m. Even if the Scottish Government is right that the lower tax rate will lead to a higher yield, there will be several years during which public services will have to be cut to fund the gap. Obviously this is the worst time to take such a risk. In any case the evidence for higher yields (Laffer Curve) is again slim.
  • Lower tax rates in one part of the UK could come up against state aid rules and what is known as the Azores judgement. In essence Scotland could face an additional cut in public spending. The cost to the block grant could be as much as £1 to 1.5bn. That's a lot of schools and hospitals.
There are many other arguments against this policy articulated by a range of groups across the spectrum. While I would always treat the views of PwC and the CBI with some scepticism, the same does does not apply to tax experts like Richard Murphy. In his commentary he said:

"The SNP’s policy on this issue comes from the economics of the madhouse. The trouble is they plan to release the mayhem, that’s intended to create on the UK economy. It’s an act of gross irresponsibility on their part. But worst of all it’s a betrayal of the ordinary people of Scotland to try to turn that country into a tax haven right now, at cost to those who need strong government and not business run amok with greed."

The only winners from this policy will be big business. The losers will be the rest of us through cuts in jobs and public services.

Monday, 15 August 2011

50p tax rate

So the Chancellor believes that we should consider scrapping the 50p higher rate of Income Tax. This is payable on income above £150k per annum and covers around 0.5% of UK taxpayers.

We have had a flurry of the usual suspects, in an obviously concerted move this morning, to wheel out the arguments. Even a Tory MP from England on BBC Scotland. Credit to Stewart Hosie MP for pouring scorn on his arguments. The tax rate is not competitive, tax efficiency, avoidance and evasion, and the most laughable, they will all flee the country. Even a large degree of scepticism it would appear from the other side of No.11, with Danny Alexander and other Lib-Dems sounding less than enthusiastic.

Of course the Cabinet millionaires will emphasise the tax efficiency argument rather than the role tax has in redistribution. The High Pay Commission has predicted a massive increase in top-end incomes over the next 20 years. Those earning £150,000 or more a year currently represent just 0.5 per cent of the population, controlling 5 per cent of national income. But trends suggest that figure will rise to 14 per cent of the national income - one in every six pounds earned - by 2030.

Even Adam Smith in his book A Theory of the Moral Sentiments said:

"The disposition to admire, and almost to worship, the rich and powerful, and to despise, or, at least, to neglect persons of a poor and mean condition, though both necessary to establish and maintain the distinctions of ranks and the order of society, is, at the same time, the great and most universal cause of the corruption of our moral sentiments."

Following the state of the economy and riots on the streets of England, the Chancellor might want to re-read his right wing icon on this issue. We now know, thanks to research by Wilkinson, Pickett, Dorling and others, that the fabric of society is strengthened when the 'distinctions of rank' are replaced by greater equality, social cohesion and trust.

Dorling's book Injustice - why social inequality persists was part of my summer reading. I doubt if it was on the Chancellor's list. As Dorling points out, the current day Adam Smith Institute was founded with donations from rich individuals who thought we were becoming too keen on ideals of equality. In Britain inequality in wealth fell from the late 1920's through to 1981 when the richest 10% held an all time low for their group of 'only' half the nations wealth. This came about because of progressive taxation, inheritance tax and higher wages fought for by unions. Things didn't change until Freidmanite policies were introduced by British and US governments in 1980. Two-thirds of the wealth increases in the US in the 80's and 90's were in assets held by the richest 1% of the population. They owned 40% of the wealth while the poorest 40% owned 1% of the nations wealth.

Adam Smith referred to this as a moral issue, another subject the PM has had much to say on in recent days. Dorling highlights that the psychological impact of inequality drives one family in three into mental health problems. Anxiety and depression is the most common mental disorder in Britain today, with almost 9% diagnosed. A fifth of children have a mental health problem in any given year. Instead of addressing the causes we indulged in mass medication and drug company profits soared.

So if the Chancellor is concerned about tax efficiency, look a little harder at tax evasion and avoidance. For the moral and economic justification, tackle inequality. Progressive tax is a key element of that strategy.

Wednesday, 10 August 2011

Waste to energy

While we await the Scottish Government's substantive response to the Hyrdro Nation consultation, they might want to take a look at what is happening in the Netherlands. Dutch public water authorities are upgrading existing sewage works into energy generating 'factories'. The aim is eventually to make sewage plants 'NEWater' factories, producing nutrients, energy and water. For example, global resources of phosphorus are shrinking and the price increasing.   

The Dutch plan is made possible by a very different approach to wastewater investment than the short termism of UK water regulation. They take a long term view of investment tied into their legislative commitments to reduce energy use by 2% per year until 2030. They take a 30 year view of investment rather than our five year cycles. They also have much greater collaboration between the water and waste sector and have government investment in R&D.

Unlike the privatised industry in England, Scotland could follow the Dutch model. Scrap the costly regulation system that seeks to ape the privatised industry down south and go for a new long term model that develops new technologies like NEWater. A 30 year plan means you can look strategically at the asset base and adopt radical solutions. There is increasing collaboration between local authorities in Scotland over waste management, so a collaborative link with Scottish Water is much easier. The Hydro Nation paper already identified the opportunities for better R&D and this would give an opportunity to apply these technologies.

It would also make a real contribution to energy efficiency as Scottish Water is the biggest user of energy in Scotland. Making the public sector duty to reduce carbon emissions a reality.