The media today has put a real focus on taxation aspects of the constitutional debate and Corporation Tax in particular. The Scotsman has used a new book, Scotland’s Road to Socialism” as their starting point. The Herald focuses on the SCDI paper and there will be a discussion on Newsnight Scotland tonight.
From a pro-independence perspective, Jim and Margaret Cuthbert argue that Alex Salmond’s vision for Scotland falls, “far short of any meaningful concept of independence”. On taxation they argue that keeping the pound will bind Scotland in fiscal ties that will radically limit the country’s ability to pursue its own taxation policy. While I am somewhat more sceptical about the general case for independence than Jim and Margaret, I couldn’t agree more and made the same argument in Red Paper publications.
The Scotsman chooses taxation aspects of my chapter in the book to make a similar point. I argue that, “The evidence that tax cuts pay for themselves (Laffer curve) is simply not there. Any saving goes into profit, not investment and many of our companies are sitting on vast cash reserves already. There will certainly be a huge hit on public finances that is unsustainable. A better way is actually higher taxation to fund investment in people, plant, infrastructure and research.”
There isn’t even any great enthusiasm in the wider business community. The SCDI paper, based largely on a business survey, that I reviewed yesterday notes, “There is no great desire to participate in a race to the lowest tax environment”. That survey put much greater emphasis on infrastructure and skills that all require public investment – not tax cuts.
Andrew Goudie makes the point in his Scotsman article that even if the Laffer Curve delivers the outcomes its supporters claim, it is a medium term strategy at best. He asks, “What would be the short-term – and hopefully transitory – compensating changes in policy and expenditure? That is, what is the opportunity cost of the corporate tax reduction in terms of foregone alternative policy and alternative public expenditure?”
Gus O’Donnell, the ever cautious former civil servant, said that there may the odd “obstacle” in the way of a Sterling zone. Other academics, such as Sebastian Payne, a public law expert at Kent University, declare more forthrightly, “The proposal of a joint sterling zone is economically unattractive and politically unsellable within the UK”. Precisely because taxation would need to be harmonised and our respective economies might not always be at the same stage of the economic cycle. Something that Dr Angus Armstrong from NIESR has articulated clearly.
And on the subject of forthright, there is a biting piece from Brian Wilson in response to Jim McColl’s rather strange interview earlier this week. On tax Brian says, “The next obvious question is how far this race to the bottom would go. If Scotland set out to undercut corporation tax in what was left of the UK, then it seems likely that our (by then foreign) neighbours would respond. And then another cut? It is easy to see why this scenario appeals to Mr McColl – but who pays? Certainly not residents of Monaco. More likely the same people who are currently paying, throughout the UK, for the same kind of priority.”
Jim McColl might regard these views as ‘unenlightened’, but they go to the heart of the SNP strategy dilemma. Nicola Sturgeon is keen to tell us about the prospects of a socially just Scotland, while Alex Salmond is promoting Scotland the tax haven. Sorry, but you can’t have both.
'Scotland's Road to Socialism' is available from Scottish Left Review Press.
Wednesday, 29 May 2013
Tuesday, 28 May 2013
SCDI on economics of the constitutional debate
Given the capacity, and understandable reluctance, of many in the business community to engage in the constitutional debate, today’s Scottish Council Development and Industry (SCDI) survey is worth a read.
While, SCDI takes no political view on independence, the organisation’s role has always been to examine and consider impartially the industrial, commercial and economic challenges and opportunities facing Scotland. Today’s paper, ‘Future Scotland: Future Growth’ is based on extensive interviews with members and a number of larger gatherings.
The report gives a good (if gloomy) overview of the Scottish economy and the long term challenges. On taxes, you might have expected such a survey to have strong views on cutting taxation, but in fact the report states:
“While a stable and affordable tax environment was important to businesses, many respondents were reasonably satisfied with the existing fiscal regime, and would only be seeking marginal improvements. While there were some calls for reductions in taxation rates to assist businesses, including business rates, VAT, national insurance and fuel duties, no particular consensus was detected for a significantly lower tax environment.”
As the latest Scottish Government paper emphasises the benefits of cutting Corporation Tax, again you might have expected this survey to encourage that position. However, it was not a priority for most respondents that Scotland is able to lower its rate below that of rUK. The list of reasons given is interesting:
• The UK’s current corporation tax rate is relatively competitive and is reducing.
•Ireland’s corporation tax rate had been set in a different era, and an independent Scotland may have “missed the boat”.
•A marginal reduction would have some, but not significant, positive impact for an independent Scotland’s economy.
•There is no great desire to participate in a race to the lowest tax environment.
•There is doubt about the extent to which tax competition will be permissible within the EU.
•The rate would have to be sustained over a reasonable timeframe, and avoid any sign of volatility, to be credible to potential investors.
•Many respondents raised questions about how a competitive corporation tax would be funded, and acknowledged that the benefits would depend on the wider package of the prevailing business environment – e.g. it would have no real benefit if the result was that Scotland could not afford to maintain competitive infrastructure.
•Corporation tax was not the sole reason for locating business – decisions also took account of physical infrastructure, access to raw materials, skilled labour etc.
•It was pointed out that global enterprises have in-built systems for ensuring tax efficiency, and that the funds going to a Scottish exchequer from corporation tax would not necessarily be large-scale.
•The headline rate is only one consideration – tax certainty and allowances are also important factors
Even more encouraging was that, “most respondents articulated the desirability of a wider business environment that ensures we can invest appropriately in good infrastructure, skills and education to support the economy’s long-term needs.”
Sectors that rely on the wider GB market were not keen on creating new barriers, although few indicated that the current debate was having a marked impact on investment decisions. The economic climate was much more significant. The emphasis was on long term stability, “relative uncertainty can jeopardise decision making.”
While respondents had mixed views on the new Scotland Act and greater devolution in general, the overwhelming view was, “it is not the powers, but the policy decisions that will count”. Hard to disagree with that as the Red Paper and UNISON Scotland consistently argues the same point.
There was a clear preference for a monetary union with the rUK but, “Numerous respondents voiced reservations about how well an independent Scotland would fare in negotiations post-referendum, and thought there was a reasonable probability that an independent Scotland’s influence could be weakened. Some respondents also questioned whether such an arrangement would in fact negate the idea of Scottish independence, and considered that an independent Scotland should have its own Central Bank”. There were also concerns about Scotland’s credit rating and the impact of speculation.
Unsurprisingly, SCDI and the respondents value impartial information from within and outwith Scotland. They also urged that their contributions should be listened to and not shouted down by one side or another. The latter may be more challenging!
Cross posted at Red Paper
While, SCDI takes no political view on independence, the organisation’s role has always been to examine and consider impartially the industrial, commercial and economic challenges and opportunities facing Scotland. Today’s paper, ‘Future Scotland: Future Growth’ is based on extensive interviews with members and a number of larger gatherings.
The report gives a good (if gloomy) overview of the Scottish economy and the long term challenges. On taxes, you might have expected such a survey to have strong views on cutting taxation, but in fact the report states:
“While a stable and affordable tax environment was important to businesses, many respondents were reasonably satisfied with the existing fiscal regime, and would only be seeking marginal improvements. While there were some calls for reductions in taxation rates to assist businesses, including business rates, VAT, national insurance and fuel duties, no particular consensus was detected for a significantly lower tax environment.”
As the latest Scottish Government paper emphasises the benefits of cutting Corporation Tax, again you might have expected this survey to encourage that position. However, it was not a priority for most respondents that Scotland is able to lower its rate below that of rUK. The list of reasons given is interesting:
• The UK’s current corporation tax rate is relatively competitive and is reducing.
•Ireland’s corporation tax rate had been set in a different era, and an independent Scotland may have “missed the boat”.
•A marginal reduction would have some, but not significant, positive impact for an independent Scotland’s economy.
•There is no great desire to participate in a race to the lowest tax environment.
•There is doubt about the extent to which tax competition will be permissible within the EU.
•The rate would have to be sustained over a reasonable timeframe, and avoid any sign of volatility, to be credible to potential investors.
•Many respondents raised questions about how a competitive corporation tax would be funded, and acknowledged that the benefits would depend on the wider package of the prevailing business environment – e.g. it would have no real benefit if the result was that Scotland could not afford to maintain competitive infrastructure.
•Corporation tax was not the sole reason for locating business – decisions also took account of physical infrastructure, access to raw materials, skilled labour etc.
•It was pointed out that global enterprises have in-built systems for ensuring tax efficiency, and that the funds going to a Scottish exchequer from corporation tax would not necessarily be large-scale.
•The headline rate is only one consideration – tax certainty and allowances are also important factors
Even more encouraging was that, “most respondents articulated the desirability of a wider business environment that ensures we can invest appropriately in good infrastructure, skills and education to support the economy’s long-term needs.”
Sectors that rely on the wider GB market were not keen on creating new barriers, although few indicated that the current debate was having a marked impact on investment decisions. The economic climate was much more significant. The emphasis was on long term stability, “relative uncertainty can jeopardise decision making.”
While respondents had mixed views on the new Scotland Act and greater devolution in general, the overwhelming view was, “it is not the powers, but the policy decisions that will count”. Hard to disagree with that as the Red Paper and UNISON Scotland consistently argues the same point.
There was a clear preference for a monetary union with the rUK but, “Numerous respondents voiced reservations about how well an independent Scotland would fare in negotiations post-referendum, and thought there was a reasonable probability that an independent Scotland’s influence could be weakened. Some respondents also questioned whether such an arrangement would in fact negate the idea of Scottish independence, and considered that an independent Scotland should have its own Central Bank”. There were also concerns about Scotland’s credit rating and the impact of speculation.
Unsurprisingly, SCDI and the respondents value impartial information from within and outwith Scotland. They also urged that their contributions should be listened to and not shouted down by one side or another. The latter may be more challenging!
Cross posted at Red Paper
Food safety comes first
I don't often quote the heir to the throne approvingly, but on food production Prince Charles has a point. Health Warning: don’t read this blog before you eat meat!
UNISON Scotland has made its submission to the Scottish Government consultation on a new food standards body for Scotland. Food safety is a devolved issue, even if you might not have realised that during the horsemeat scandal, but many of the functions have been administered by the UK Food Standards Agency. The Scottish Government now plans to create a Scottish quango to do this - something we support.
The establishment of such an agency is in principle unlikely to be controversial. What it does might be more of an issue. The consultation paper talks rather vaguely about other roles. It is unclear if this might include environmental health functions currently administered by local authorities, or public health roles carried out by NHS Scotland. Either way, any centralisation of functions currently delivered locally would be wrong in principle. The Scottish Government has form on centralisation, so this needs watching.
Another reason for concern over widening the role of the new body is the FSA approach to regulation. It is not unusual for government bodies to become 'captured' by their main client group. Our concern is that the UK FSA was much too close to the meat industry and promoted 'light touch' regulation, even during the horsemeat scandal.
We need to avoid this in Scotland, but it will be challenging. The Environment Minister's main concern during the horsemeat scandal was to protect the Scottish Meat brand. Now, Scottish Meat is undoubtedly very good, but it is also a premium product, out of the reach of low paid consumers. These consumers need regulatory protection for mass market products. I would also argue that Scottish Meat needs this. It takes many years to build a brand, but just one scandal to destroy it.
The Scottish Government should take the opportunity in establishing the new body to ensure its independence and end the dominance of the food industry in lobbying for lighter regulation. For example, the transfer in 2006 of responsibility for ensuring only clean livestock are slaughtered, from the state controlled Meat Hygiene Service to the slaughterhouse Food Business Operators. This and current proposed changes such as introducing visual inspections instead of cutting animals open to check for sickness or diseases are dangerous steps that Scotland can correct. Below are a couple of examples of what can be missed if you rely on visual inspections only.
Whatever the meat lobby might achieve in Europe or at UK level, we need to ensure that such conditions don’t enter the food chain in Scotland. This means independent, qualified and skilled officials making these decisions, not the people who work for the meat plants. They may or may not be under pressure to maximise profit and minimise waste for the meat plant owner. The important point is that consumer confidence requires independent inspection and that needs to be rebuilt after the horsemeat scandal.
Independent officials carry out ante & post mortems on every red meat animal we eat to ensure the consumer does not eat abscesses, tumours, pneumonia, parasitic cysts and a host of other culinary delights. Personally, I prefer it that way! So let’s make sure the new food safety body in Scotland does as well.
UNISON Scotland has made its submission to the Scottish Government consultation on a new food standards body for Scotland. Food safety is a devolved issue, even if you might not have realised that during the horsemeat scandal, but many of the functions have been administered by the UK Food Standards Agency. The Scottish Government now plans to create a Scottish quango to do this - something we support.
The establishment of such an agency is in principle unlikely to be controversial. What it does might be more of an issue. The consultation paper talks rather vaguely about other roles. It is unclear if this might include environmental health functions currently administered by local authorities, or public health roles carried out by NHS Scotland. Either way, any centralisation of functions currently delivered locally would be wrong in principle. The Scottish Government has form on centralisation, so this needs watching.
Another reason for concern over widening the role of the new body is the FSA approach to regulation. It is not unusual for government bodies to become 'captured' by their main client group. Our concern is that the UK FSA was much too close to the meat industry and promoted 'light touch' regulation, even during the horsemeat scandal.
We need to avoid this in Scotland, but it will be challenging. The Environment Minister's main concern during the horsemeat scandal was to protect the Scottish Meat brand. Now, Scottish Meat is undoubtedly very good, but it is also a premium product, out of the reach of low paid consumers. These consumers need regulatory protection for mass market products. I would also argue that Scottish Meat needs this. It takes many years to build a brand, but just one scandal to destroy it.
The Scottish Government should take the opportunity in establishing the new body to ensure its independence and end the dominance of the food industry in lobbying for lighter regulation. For example, the transfer in 2006 of responsibility for ensuring only clean livestock are slaughtered, from the state controlled Meat Hygiene Service to the slaughterhouse Food Business Operators. This and current proposed changes such as introducing visual inspections instead of cutting animals open to check for sickness or diseases are dangerous steps that Scotland can correct. Below are a couple of examples of what can be missed if you rely on visual inspections only.
Whatever the meat lobby might achieve in Europe or at UK level, we need to ensure that such conditions don’t enter the food chain in Scotland. This means independent, qualified and skilled officials making these decisions, not the people who work for the meat plants. They may or may not be under pressure to maximise profit and minimise waste for the meat plant owner. The important point is that consumer confidence requires independent inspection and that needs to be rebuilt after the horsemeat scandal.
Independent officials carry out ante & post mortems on every red meat animal we eat to ensure the consumer does not eat abscesses, tumours, pneumonia, parasitic cysts and a host of other culinary delights. Personally, I prefer it that way! So let’s make sure the new food safety body in Scotland does as well.
Thursday, 23 May 2013
The real cost of redundancy
Audit Scotland has published a report on the cost of early departure schemes to meet the staffing cuts caused by austerity economics. However, the real cost to local services and the economy is much greater.
The report ‘Managing Early Departures from the Scottish Public Sector’ states that:
“Scotland’s devolved public sector has been spending about £280 million a year on early departure schemes. This has helped reduce the size of its workforce, encouraging over 14,000 staff to accept early retirement in 2010/11 and 2011/12.”
They make a number of reasonable recommendations on best practice in managing early departure schemes. They also highlight the disproportionate amount spent on early retirements for senior staff. Packages averaging over £100,000 represent 40% of the total cost. There are also variations between services as this exhibit shows.
This is all very useful, but it is only part of the picture. We know that over 50,000 jobs have gone from the public sector in Scotland since greedy bankers caused the crash in 2008. This means that most of the staffing cuts have come from natural wastage. The consequences of not filling vacancies can be seen in local services. Delays in planning applications, the 15 minute care visits and of course pot holes in the roads. These are just a handful of examples highlighted in the media in recent weeks.
It is also poor value for money. UNISON has consistently argued for an alternative to austerity economics. Growing our way out of trouble: UNISONs alternative budget for jobs and public services published in March says:
• on average every redundancy creates £29,400 in additional costs to the public sector as well as undermining morale and productivity
• most of the cost of employing a public service worker is recouped by the state through increased tax revenues and reduced benefit payments
• economic research shows that for every pound spent on local public services, 64 pence is re-spent in local economies, supporting jobs and businesses
Every job lost also costs the local economy. These workers no longer have the cash or the confidence to spend in the shops and on services. It is that lack of demand, as the IMF highlighted yesterday, that is holding back growth and has resulted in the longest and deepest recession this century. Putting the human cost to one side, this is real cost of redundancy.
The report ‘Managing Early Departures from the Scottish Public Sector’ states that:
“Scotland’s devolved public sector has been spending about £280 million a year on early departure schemes. This has helped reduce the size of its workforce, encouraging over 14,000 staff to accept early retirement in 2010/11 and 2011/12.”
They make a number of reasonable recommendations on best practice in managing early departure schemes. They also highlight the disproportionate amount spent on early retirements for senior staff. Packages averaging over £100,000 represent 40% of the total cost. There are also variations between services as this exhibit shows.
This is all very useful, but it is only part of the picture. We know that over 50,000 jobs have gone from the public sector in Scotland since greedy bankers caused the crash in 2008. This means that most of the staffing cuts have come from natural wastage. The consequences of not filling vacancies can be seen in local services. Delays in planning applications, the 15 minute care visits and of course pot holes in the roads. These are just a handful of examples highlighted in the media in recent weeks.
It is also poor value for money. UNISON has consistently argued for an alternative to austerity economics. Growing our way out of trouble: UNISONs alternative budget for jobs and public services published in March says:
• on average every redundancy creates £29,400 in additional costs to the public sector as well as undermining morale and productivity
• most of the cost of employing a public service worker is recouped by the state through increased tax revenues and reduced benefit payments
• economic research shows that for every pound spent on local public services, 64 pence is re-spent in local economies, supporting jobs and businesses
Every job lost also costs the local economy. These workers no longer have the cash or the confidence to spend in the shops and on services. It is that lack of demand, as the IMF highlighted yesterday, that is holding back growth and has resulted in the longest and deepest recession this century. Putting the human cost to one side, this is real cost of redundancy.
Wednesday, 22 May 2013
Laffer Curve economy
The Scottish Government's economic case for independence is strong on historical analysis but light on how Scotland would address the challenges it highlights. It also falls into the same complacency as the Treasury paper, in not explaining why current devolved powers have not been fully used to tackle inequality.
The Scottish Government has published 'Scotland's Economy: the case for independence'. It sets out their analysis of Scotland's relative balance sheet in terms of public finance and the strengths of the Scottish economy. It then claims a better future is possible if Scotland had access to all the economic and policy levers.
The first section sets out Scotland's relative financial strength with a balance sheet as an annex. I say relative because it still looks pretty challenging, but probably in the short term slightly better than the rest of the UK, if you include oil revenues. The debate is over the medium to long term because of the reliance on volatile oil prices. Then we get a decent analysis of Scotland's economic strengths sector by sector. So far so good.
Then the paper starts to go downhill a bit. A predictable section on how Scotland has been held back by Westminster in tune with the daily refrain from Scottish ministers. Now, there is much here that I would agree with, particularly the importance of tackling inequality. However, there is little explanation of how the Scottish Government has used their existing powers to address this issue. You should always judge politicians on what they have done - that's the best evidence of what they promise for the future. Sadly, the Scottish Government's balance sheet on this is decidedly mixed. On many of the issues they criticise successive UK governments for, there is little evidence that they would have done anything different at the time. Banking regulation is an obvious example.
Finally, we get to how they would use the powers that independence would bring. This is the lightest part of the paper. Of course there are good examples of successful small countries. However, the paper gives insufficient weight to the challenges facing small countries with a large neighbour as their dominant trading partner.
Then we have the currency union argument. I have covered this at length before, but the proposal is being taken to new lengths of absurdity. It is frankly ridiculous to assert that if we vote to leave the UK then we have some sort of entitlement to remain within the institutions of that union. We are entitled to our share of the assets and the liabilities. That might mean 10% of the desks in the Bank of England, but not to put our bums on any of the seats that remain. And even if we did agree a new Sterling union, there would be significant constraints on our fiscal and monetary polices. All the policy drivers that earlier sections of the paper complains about.
That leaves us with cutting Corporation Tax as one of the few concrete proposals in the paper. The FM confirmed that this remains the cornerstone of their policy. In the context of this paper there is a rich irony in the FM wanting to adopt Osborne economics as they are clearly both supporters of the Laffer Curve. The problem is that not even Osborne really believes that it will work as the Red Book shows anticipated revenues falling, even when they predict the economy picking up. There is simply no chance of a future UK government in a currency union agreeing to differential tax rates and even if they did, it would simply lead to a race to the bottom.
Overall, the paper makes a decent case for Scotland's strengths as an economy and even for our relative position with regards public finances. The paper's big weakness is on how Scotland would use the powers of independence and the consequences of separating from the UK. Much more work is needed on these issues.
Tuesday, 21 May 2013
Banking and financial services
The Treasury has published the latest in their Scotland analysis series on financial services and banking.
It certainly raises a large number of challenging issues for the Scottish Government to respond to. However, I have to admit to some irritation as I ploughed through the lengthy document. The general approach is to emphasise the strength of the UK financial services industry and the City. It's as if the financial crash never happened. And this delusion isn't limited to the UK government. In response, Scottish Finance Secretary John Swinney said:
"Much of the Treasury paper seems to be based on a flawed, outdated view of the world which takes no account of the substantial banking reforms which have been ongoing across Europe since 2008".
Really? We still have banks that are too large to fail, an issue that would be particularly relevant to an independent Scotland. Others argue that a future financial crisis is an inevitable feature of capitalist economies. Access to liquidity is also dependent on being part of a Sterling Zone, that only comes at the price of major constraints on monetary and fiscal policy.
In addition the UK would struggle to fund a second bail out, so Scotland just wouldn't be at the starting blocks. Robert Peston's blog covers all this well and the Deputy Governor of the Bank of England points to higher borrowing costs and institutions relocating headquarters to London.
The rest of the Treasury's arguments are less strong. Small countries don't generally have a problem establishing regulatory systems any more than large countries. Yes of course there would be disruption and cost, but this would be a short term problem. I would be sceptical about 'economies of scale' arguments, as again there are plenty of small countries with competitive mortgage and other financial services.
In fact some smaller countries do very much better. For example, private pensions in the Netherlands are better managed than in the UK. Annuity rates are much better, probably because of lower fees and other transaction costs. Overall, the Treasury paper is surprisingly light on pensions, unless it is to be the subject of another paper. It touches on the ICA paper, but that was really only posing questions. The Treasury has access to the Government Actuary Department's data and so you would expect an analysis on public service pensions as well.
The same applies to consumer protection. Yes, Scotland would lose the benefits of spreading risk, but our risks would be that much smaller. We could also legislate for much stronger regulatory controls as we would be distanced from the lobby stranglehold the City. Has on Westminster. Although the Scottish Government's approach to regulation doesn't inspire confidence. Not to mention the First Minister's support for the ABN Amro take over and his views on 'gold plated' banking regulation before the crash.
Overall, the Treasury paper is a mixed bag. Its detailed approach throws down a lot of questions for the Scottish Government to answer. However, it is also hugely complacent about the failings of the UK financial system. The challenge for the Scottish Government in their response will be to show us not just the failings of the UK system, but how an independent Scotland would regulate these matters better. So far there is little evidence of radical thought, rather lets not frighten the financial establishment - when they actually need a shake up!
Friday, 17 May 2013
Bumpy solutions to road maintenance cuts
You may be surprised to hear that Scotland's local roads are improving. If you're worried that your eyes and back muscles are deceiving you, dont worry - the're not! All those potholes and bumps are real, whatever the official statistics might say.
Audit Scotland has published a report ‘Maintaining Scotland’s Roads’. This is an audit of progress by councils on the 2011 report that called for a new approach to road maintenance, including asset plans and greater use of shared services between councils. The National Road Maintenance Review has been in operation for two years and Audit Scotland clearly believes faster progress is required. They want to see better data, stronger asset management plans and greater centralisation of services.
However, when you look at the detail in the report a different picture emerges. The key metrics include:
“The percentage of local roads in acceptable condition has increased marginally from 66.1 to 66.7 per cent over the last two years, despite a reduction in roads maintenance spending from £492 million in 2009/10 to around £400 million in 2010/11 (a 21 per cent reduction in real terms).”
The idea that road surfaces have improved the past two years will come as something of a surprise to motorists and cyclists! Indeed the evidence paints a different picture:
• council payments to compensate drivers for pothole damage have risen, from around £340,000 in 2007/08 to £1.2 million in 2011/12
• Forty-five per cent of local roads users in Scotland consider roads condition to be poor, very poor or terrible, the worst rate in the UK.
• Scotland is perceived to have more potholes per mile than any other region in the UK, and more worn or faded roads markings.
• Drivers in Scotland are more likely to report pothole damage, with 44 per cent saying their cars had been damaged at some point over the last two years.
The reality is that cutting budgets by a fifth means that councils are being forced to adopt patch and mend methods rather than proper repairs. Members tell us that local road surfaces designed for 15 years are being stretched to almost 50 years. If local roads were funded on the same scale as trunk roads, much more could be done.
Any new format for roads asset management plans, or calls for more or different data on the roads - or indeed if any proposals emerge for structural change – is just tinkering around the edges. It is the scale of the cutbacks which is the issue and people can see and feel the bumpy roads on a daily basis.
Sadly, this is just another example of local government cuts. You can patch and mend in departments for a few years, but we are simply creating longer term problems.
Audit Scotland has published a report ‘Maintaining Scotland’s Roads’. This is an audit of progress by councils on the 2011 report that called for a new approach to road maintenance, including asset plans and greater use of shared services between councils. The National Road Maintenance Review has been in operation for two years and Audit Scotland clearly believes faster progress is required. They want to see better data, stronger asset management plans and greater centralisation of services.
However, when you look at the detail in the report a different picture emerges. The key metrics include:
“The percentage of local roads in acceptable condition has increased marginally from 66.1 to 66.7 per cent over the last two years, despite a reduction in roads maintenance spending from £492 million in 2009/10 to around £400 million in 2010/11 (a 21 per cent reduction in real terms).”
The idea that road surfaces have improved the past two years will come as something of a surprise to motorists and cyclists! Indeed the evidence paints a different picture:
• council payments to compensate drivers for pothole damage have risen, from around £340,000 in 2007/08 to £1.2 million in 2011/12
• Forty-five per cent of local roads users in Scotland consider roads condition to be poor, very poor or terrible, the worst rate in the UK.
• Scotland is perceived to have more potholes per mile than any other region in the UK, and more worn or faded roads markings.
• Drivers in Scotland are more likely to report pothole damage, with 44 per cent saying their cars had been damaged at some point over the last two years.
The reality is that cutting budgets by a fifth means that councils are being forced to adopt patch and mend methods rather than proper repairs. Members tell us that local road surfaces designed for 15 years are being stretched to almost 50 years. If local roads were funded on the same scale as trunk roads, much more could be done.
Any new format for roads asset management plans, or calls for more or different data on the roads - or indeed if any proposals emerge for structural change – is just tinkering around the edges. It is the scale of the cutbacks which is the issue and people can see and feel the bumpy roads on a daily basis.
Sadly, this is just another example of local government cuts. You can patch and mend in departments for a few years, but we are simply creating longer term problems.
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