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.

Sunday, 25 March 2012

Social Justice Scotland

I was speaking at 'Changin Scotland' Scotland this weekend. An excellent weekend of politics and ideas in a relaxed non-partisan context. Superb scenery and weather helps! This was the Independence Weekend and my contribution was on social justice, in a Scotland under extended devolution or independence.

Ask people to define social justice and you’re going to get many different definitions based on their political, religious or social perspective. Of course others will tell you it’s a fairytale unachievable in any form of society. i would argue it is about creating a Scotland, that is based on the principles of equality and solidarity, that understands and values human rights, and that recognises the dignity of every human being. And lets not get too parochial – it should also drive our approach to international issues. The Constitution of the International Labour Organisation affirms that "universal and lasting peace can be established only if it is based upon social justice”. There is also global justice movement based on human rights and developing in important spheres such as climate change.

Social justice has broad political support, even the UK Government has a social justice strategy, hard to imagine after this week’s budget, but it’s called ‘Social Justice – Transforming Lives’. Scottish Labour and the SNP would both argue it is central to their purpose and it is a pillar of Green Party thinking.

It also has a strong base in civil society. It was a part of Catholic social teaching, the Protestants' Social Gospel long before John Rawls secular concept of social justice with his liberties (thought, conscience, political, association and liberty of the individual) and in the work of many of Scotland’s NGOs. I would also point to socialist tradition of thinkers, such as Richard Tawney, George Orwell, and, later on, Richard Titmuss, who all argued against the class division and selfishness of acquisitive market societies. And to be fair to the Liberals (not many have cause to at present) the Beveridge Report that aimed to slay the ‘five giants’: want, disease, ignorance, squalor, and idleness.

We should remember that it was a Scot, John Smith who moved Labour off common ownership and onto social justice with his Commission. And today we even have Ian Duncan-Smith’s Centre for Social Justice.

However broad, support for social justice is not universal. Market theorists like Hayek dismiss the very idea of social justice as meaningless, he said “Social justice does not belong to the category of error but to that of nonsense”.

Even if you accept the concept there is a further debate as to who should be responsible for making sure we have a socially just society. Should you legislate for social justice or merely rely on the moral compass of society’s members? For those of us on the centre-left we might accept that the state has a role here through progressive taxation, income redistribution and even property redistribution to create equality of opportunity.

To highlight the individual response lets consider a sensitive issue in Scotland, devolved or independent, such as consideration of reproductive rights, including the right to abortion and access to contraception. A social justice issue or just a matter of private choice? I would argue that individual choice fails to acknowledge the ways in which racism and economic disparities limit the choices of many women – but others even on the centre left might disagree.

Having introduced the concept lets move on to the practice.

Both relative poverty and economic inequality have risen over the past 13 years in the UK. That deprivation has increased even more among minorities, and  second and even third-generation immigrants remain among most deprived. The poverty rate for minority ethnic groups stood at 40%, twice the 20% found amongst white people.

I would give credit to the Labour decade when poverty fell (faster in Scotland) even though the New Labour mantra was relaxed about inequality. Peter Mandelson being “intensely relaxed about people getting filthy rich” – although I see he has recently been having second thoughts. Pensioner and child poverty in particular was tackled, although less progress on poverty for those in work. Yes, the minimum wage was a huge step forward but Labour leaders have never really accepted the economics of wages as recently articulated by Stewart Lansley and others. Poverty is again on the increase and the long term reduction in the value of wages is an important factor. And lets not forget pay inequality with the gender pay gap at 9% for FTE and 19% for part time workers.

What are the tools that Scotland, devolved or independent might deploy to strengthen social justice.

Material inequality requires income redistribution. Largely a function of the tax system. An independent Scotland would have greater control of these levers but would there be the political will to use them? Apart from the modest ‘Penny for Scotland’ no serious proposal let alone use has been made of the 3p power. Arguably because it only applies to the basic rate, but will the 10p power in the Scotland Bill be used? Labour is wary of being labelled as “tax and spend” and the SNP appear wedded to a low tax model in its Celtic Tiger approach to Corporation Tax and the regressive Council Tax freeze.

There has been some progress with the Scottish Living Wage, in the public sector at least, although less in using procurement to drive it through into the private and voluntary sector.

As Wilkinson & Pickett (Spirit Level) have highlighted inequality is about more than income. It requires action on education, health, criminal justice and just about every aspect of social policy. Most of these are already devolved yet arguably we have been better at producing glossy strategies than solid action. Early years, skills, child poverty, health inequalities etc all have such strategies and they all look very similar to those adopted by the previous administration.

Preventative spending illustrates this well. Just about everyone accepts the logic – Finance Committee, Christie Commission, but the doing is much more challenging. Targeting resources on the bottom 10% as Christie recommended makes sense even to the right wing given the impact on public expenditure. Christie estimated 40% public spending in Scotland goes on failure demand. But again difficult in practice.

Lets look at some key areas identified in the Spirit Level were tackling inequality matters. Physical & mental health, education, criminal justice, social cohesion etc. Their evidence shows that more equal societies do better on all of these factors.

So how are we doing in Scotland?

In Scotland the gap between the top and bottom in key outcomes such as income, employment, health, learning and safety is much wider in Scotland than in other European countries. Worse still, most of these negatives are intergenerational and often clustered in small areas. There have been improvements since devolution but, on most key dimensions, inequalities have remained unchanged or become more pronounced.

There are some positives. Healthy life expectancy and household income have, in general, improved as have some learning outcomes, and the overall risk of being a victim of crime. However, income inequality has widened since devolution Because the richest 30% have got richer and the bottom 30% have remained static.

In education, the gap between the bottom 20 per cent and the average in learning outcomes has not changed at all since devolution. The gap in healthy life expectancy between the 20 per cent most deprived and the 20 per cent least deprived areas has increased from 8 to 13.5 years. 32 per cent of adults in the most deprived areas in Scotland report a long-standing illness, disability or health problem compared to 14 per cent in the least deprived areas.

Half of all young people in Scottish prisons have been in care. This rises to 80 per cent when looking only at those convicted of violent offences. This is despite just one per cent of all Scottish children having been in care. Of course we lock up more people than in most European countries and politicians compete to be tougher on crime. The link between deprivation and the likelihood of being a victim of crime has also become stronger.

These are largely ‘hard’ issues, but what about the softer ones? Carol Craig in her book “Tears that made the Clyde” highlights that even after taking account of deprivation, Glasgow’s indicators are worse than comparable cities like Liverpool and Manchester.

Take family breakdown. Over 46 per cent of families with dependent children in Glasgow are lone parent. That's one of the highest figures in the world.  90% of them include the mother, not the father, that's a lot of men detached from family life. 48% compared to 30% in England and Wales are single or never married.

Carol raises other issues like Scotland’s relationship with alcohol, a culture of violence and consumerism -  but the importance of committed relationships, love and tenderness should not be overlooked.

Most of these issues are devolved already. Yes there are important macro economic levers. Yes, DWP powers over benefits and jobs are necessary to create joined up strategies. But essentially we have many of the necessary levers – but do we have the political will?

So let’s start the debate from the sort of Scotland we want and I would argue that that is a Scotland rooted in social justice with a real commitment to tackle inequality. Then look at what type of constitutional change can assist. But we also have to commit to using new powers. As Christie report said “This country is a paradoxical tapestry of rich resources, inventive humanity, gross inequalities, and persistent levels of poor health and deprivation”. 

I believe that extended devolution or independence could bring important levers to help address these issues. But the question I left my audience with is “Will greater devolution or independence change any of the issues I have covered today?” I suspect most of my audience believed it could - but the jury is still out on the issue of political will.

Wednesday, 21 March 2012

Budget 2012

Billed as the ‘Robin Hood’ budget the Chancellor not surprisingly turned out to be more of a Sheriff of Nottingham. As always with the Budget the devil is in the detail and that takes some time to digest. But here are a few initial observations.

·         Even the OBR is forecasting little change in growth for coming year and lower for future years, although they still look pretty optimistic. Not surprising when demand has been taken out of the economy through public sector cuts. Those workers in a job are less secure, suffering real term pay cuts and as a consequence are not spending.
·         Even the borrowing figures don’t look as good as the advanced spin. Extra £6bn borrowing in February covered in these figures?
·         The increase in the personal allowance is welcome in principle. Taking 70,000 low paid Scots out of the tax system sounds good. However, these are the very same people who are getting hit by other measures including changes in working tax credits, benefit cuts and NI rebates. Plus we should remember that the biggest gainers from this are middle income earners - almost £900 for some households as opposed to the £200 or so for the average household. Many low paid workers will see little of this due to the impact on tax credits.
·         Pensioners will need to look at the small print with the abolition of age allowances. The elderly are about to pay more.
·         Merging tax and NI will need to be studied. It removes the contributory principle and it comes at a time when the government has introduced a stealth tax from next month with a cut in the contracted out NI rebate.
·         The £140 pension sounds good. But watch out for the abolition of the contracted out NI rebate that goes with it. Big additional cost for employers and employees and further disincentive to stick with a quality pension scheme. Just short termism building up huge problems for the future.
·         Regional pay will simply exacerbate the north-south divide and suck even more out of the economy in areas that need the cash the most.
·         Then the big one, cutting the 50p tax rate to 45p. Spurious claims about the amount it yields conflict with previous HMRC admissions. I would trust Richard Murphy on this one. £10bn off welfare benefits and £3bn for the richest 1% - Robin Hood in reverse!
·         We are supposed to be palmed off by a 2% increase in stamp duty on homes worth over £2m. Only 4000 of these were sold last year and that means 99% of the richest 1% getting a tax cut won’t be affected. Yes, a bigger hike if they use the overseas company tax dodges. But how will this element be collected from unknown foreign companies? Peston is good on this.
·         Then the GAAR tax avoidance mechanism. Right in principle but will this one be strong enough? Is it even intended to do anything other than tackle the most offensive dodges? I doubt it given the track record over the treatment of firms like Vodaphone. Plus it requires tax inspectors to enforce and the government have cut them relentlessly. Only recently the Treasury signed off a friendly tax deal with Switzerland.
·         Corporation Tax cut to 22%. There is no evidence that this does anything for growth at a time when many companies are cash rich. Companies are more likely to use the gains to increase dividends than invest in skills. It will also make the bottom line look better and so fat cat bonus payments will go up - even more than last year’s bumper 43% increase for the top bosses. This is a £500m giveaway that could be used to stimulate the local economy in the pockets of the low paid.
·         Measures to boost investment in North Sea will be welcomed in that industry, but they are only sorting out the mess they made last year.
·         £20.3m gain in Barnett consequentials is small relief given the massive cuts in the Scottish budget this year.

I could produce an even longer list of all things missing from the budget. Action on investment, public services, young people and unemployment. But instead this is just the sort of Tory budget you would expect. Tax cuts for the rich, £40,000 each for 14,000 millionaires, paid for by everyone else. At least we didn’t get “we are all in this together”!

Wednesday, 14 March 2012

Retirement Age

I was a contributor on the BBC 'Call Kaye' programme this morning on the subject of Tesco's decision to increase the retirement age in their pension scheme to 67.

In fairness to Tesco they are not alone in this and of course the ConDem coalition is increasing the state retirement pension in the same direction, together with public service pension schemes. While I am being fair to Tesco they do at least have a pension scheme. Unlike two-thirds of employers who contribute nothing to pensions, costing us the taxpayer £15bn to subsidise their profits.

The drive to increase retirement age is less about us living longer and more about cutting pension costs. There are two main points I made this morning:

  1. Not everyone is living longer and averages can hide a harsher reality for many. Lord Hutton came to Scotland to tell us that on average we are living to 75. Tell that to men in parts of Glasgow who die at 54 and women not much longer. The life expectancy of a female cleaner in Scotland has hardly changed for 30 years. Why should workers like this save for a pension they are unlikely to collect when companies and the government keep moving the goal posts?
  2. A one size fits all solution doesn't work. The programme this morning heard from nurses, paramedics and care workers who simply couldn't keep working to 60, let alone 65 or 67. And if they don't their pension is cut creating further problems for the economy and pressure on welfare benefits.
Various pension experts came on to talk about pension and career planning. But if a working life is to be extended from 40 to 50+ years then planning over that time frame is difficult if not impossible. Again a caller gave a very practical example of that problem. 

Of course we advise members in their 20's and 30's to save for retirement through good occupational pension schemes. But when your pay is frozen, you can't afford a mortgage and your job is increasingly insecure - pensions come pretty far down the list of priorities. The Government needs to get realistic on pensions and not simply view it as another opportunity to grab cash from workers pockets. 

Tuesday, 13 March 2012

Youth Unemployment

I was speaking last night at the AGM of our Skills Development Scotland Branch on the subject of youth unemployment. Hard to think of an audience that knows more about the subject than careers officers in this branch.

The jobless rate in Scotland stands at 231,000, with 88,000 falling into the 18-24 year old category, rising to over 100,000 when you include 16-18 year olds. The highest figure for a generation and an 83% increase since the economic downturn. Youth unemployment in Scotland is 3% higher than the UK average and increasing more rapidly. This is caused primarily by the recession and the UK government's austerity measures that are taking demand out of the economy through public service cuts, just at the time when they are most needed.

Youth unemployment in Scotland can be broken down into three groups:
• 35,000 in education while looking for work.
• 21,000 with minimal or no qualifications coupled with other disadvantages
• 44,000 with reasonable qualifications who in a stronger labour market would probably be in employment.

Let’s start by looking at some of the reasons why should we care about unemployment:

• Because of the lost output involved. During a long period of unemployment, workers can lose their skills, causing a loss of human resources to the economy.

• Unemployment is a stressful life event that makes people unhappy. It increases susceptibility to illness and loss of self-esteem, leading to depression and a higher propensity to commit suicide. It can also reduce life expectancy.

• The long-term unemployed are at a particular disadvantage trying to find work and the effects of unemployment appear to depend a lot on how long the person has been unemployed for.

• Unemployment while young, especially of long duration, causes permanent scars rather than temporary blemishes. For the young a spell of unemployment does not end with that spell; it raises the probability of being unemployed in later years and has a wage penalty. These effects are much larger than for older people.

• As unemployment rates increase, crime rates tend to rise, especially property crime. Studies have found that youth unemployment and adult unemployment are both significantly and positively related to burglary, theft, fraud and forgery and total crime rates. For each of these offence categories the relationship between youth unemployment and the specific crime was found to be somewhat stronger.

Unemployment among the young therefore contributes to the intergenerational deprivation highlighted by the Christie Commission and subsequent public expenditure. The lifetime cost of a single cohort of young people failing to make the transition into regular employment is estimated be in the region of £2 billion. It also drives inequality and the associated impact as set out by Wilkinson and Pickett in The Spirit Level. Recognising that it is not the only issue in cities like Glasgow as Carol Craig has highlighted in Tears that Made the Clyde.

What should the UK government be doing with the budget coming up this month? First and foremost we need a co-ordinated plan for growth, with a focus on tackling record levels of youth unemployment. We risk losing a generation of talented and highly skilled youngsters to joblessness and stunted careers unless the UK government rapidly increases investment in quality employment programmes.

The current cut-price, poorly-targeted and unpaid work experience schemes are not helping enough young people back into jobs so the government should introduce a guarantee of paid work or training for anyone young person who has been out of work for at least six months, as set out in the TUC submission on the budget. That submission also says that support for young people should not be restricted to those out of work and calls for the introduction of a new youth credit for all 16-24 year olds to boost access to training, work placements or progression into better jobs.

And what about the Scottish Government's response? They have appointed a new minister for Youth Employment who has published a draft strategy that says there should be:

• a clear and targeted approach to support young people as they look for jobs

• the development of opportunities within the apprenticeship programme

• targeted support to help young people get jobs in the energy and the low carbon economy

• support through the My Work Coach, which is under development by Skills Development Scotland

• and financial support to employers to encourage them to employ young people from disadvantaged groups

Through Opportunities for All the Scottish Government is planning to ensure that every 16-19 year old not in employment, education or training (NEET) has access to a suitable place in learning or training. In 2012/13 and in each year of the current Parliament they will offer 25,000 Modern Apprenticeship opportunities within an overall total of 46,000 training places.

There are many good aspects of this strategy but it is not consistent. The Scottish Government has protected Higher Education spending but Further Education budgets have been cut by 13.5% over the next three years - a £70million cut. The extra £15million recently announced still leaves a cut of at least £55million while the guarantee of a job education or a training place for all those aged 16 to 19 will restrict places available for those out-with this age group unless more places are available. Careers officers this evening pointed out that it is often introductory courses that are being cut. The very courses accessible to those young people without qualifications.

School leavers unable to find work, adults seeking retraining and cuts in courses mean there is increasing demand for fewer college places. Young people in particular are finding that increased competition leaves them unable to get places on college courses that similar young people have accessed in the past.

My audience of careers officers are the key professionals trained to ensure that people are able to make the right choices throughout their working lives. The careers service has seen a 50% increase in adults accessing their services during this recession with many adults seeking new skills as they lose jobs or see career prospects cut off by cuts. The careers service is facing increasing demands at a time where budgets are very tight. In fact SDS has been cut more deeply than other services with a further 150 posts going this year.

They are concerned that there is not adequate funding to meet the commitment of a place on training or work for all 16-19 year olds. If the young person is to benefit in the long term it needs to be appropriate and lead to a long term future job. It should not just be about the politics of keeping youth unemployment figures low.

New technology has allowed more people to access careers information more easily, but the My World of Work website is still only a website. New job titles like Work Coach don't even have job descriptions and there is an obvious suspiciion that this is simply window dressing to cover more service cuts. 

Many people face multiple barriers to employment and need the focused support of careers adviser. This involves in depth work with individuals who have complex needs. In the 14-19 age group many young people have already disengaged from education or are in the process of doing so. Guidance teachers therefore cannot replace the role of careers staff. Careers advice is a specific role and requires a range of skills and knowledge. It is about a lot more than showing clients some college prospectuses and telling them to clean up for job interviews.

Members are particularly concerned about Activity Agreements. The funding of the pilot scheme was much higher than the level available for implementation. Currently the focus appears to be more on having a positive outcome on paper rather than a genuine career path. Members feel they are just being used to mask youth unemployment.

In conclusion youth unemployment is a symptom of the disastrous economic policies being pursued by the ConDem coalition. In any recession it is usually the young that suffer the most. So the best strategy for youth unemployment is a growth strategy as set out in the Better Way campaign. This will be reinforced by the STUC at the demonstration at the Scottish Conservative conference in Troon on 24 March.

However, the Scottish Government does have powers to support young people and minimise the long term effects of unemployment. The draft strategy has many good features but it will be undermined by college and careers service cuts.

Sunday, 4 March 2012

Economic case for wages

I am at the Scottish Labour conference this weekend. UNISON’s motion tackles the statement in February by the UK Labour leadership on public sector pay policy and how Scottish Labour should address this issue.

 Hard pressed public service workers have already endured real cuts in living standards, loss of jobs and face continuing uncertainty. This is as a result of the ideologically inspired ConDem cuts and the subsequent Scottish Government cuts and pay policy. We argue that Labour should not embrace a pay policy that hits public service workers, particularly low paid women, who have already had two years of pay freezes and job losses.

The argument against pay cuts is usually made in the language of fairness. When bankers and others are awarding themselves fantastic bonuses and the gap between rich and poor is growing, this is of course a fair analysis.

 But we should also understand the economic case against pay cuts. In 1978 the UK wage bill represented 58% of the economy. By 2011 this had dropped to 53.8%. This means that workers are taking home £60 billion a year less than workers did 30 years ago. This gap has largely been plugged by rising household debt on the back of a housing boom, all of which contributed to the financial crash.

 This falling wage share has hit those on low and middle incomes hardest. The poorest fifth of workers are 43% worse off than they would have been if the wage share remained at 1978 levels. The loss for middle earners is 36%, while for the top fifth the loss is only 6%.

 So I would suggest that Ed Balls would do well to look at the merits of wage-led growth, based on collective bargaining and better skills, together with a broad base of well paid jobs. This is a better way to generate sustainable economic growth. I would also recommend some bedtime reading including Stewart Lansley’s ‘The Cost of Inequality’ and the TUC pamphlet ‘All in this Together?’

We should also recognise the negative economic impact these ‘austerity’ measures are having on local communities across Scotland. An approach to overall UK fiscal policy built around the idea of declining living standards for workers in public services will not be in the interests of those who work hard providing public services in Scotland, nor those who rely on them.

Whatever UK Labour decides to do, Scottish Labour has an opportunity to develop a distinct policy position in response to the cuts in public services and a Scottish pay policy that reflects the values of Scottish Labour. Such an approach will help rebuild support for Scottish Labour in our communities.