Welcome to the Public Works blog.

Public Works is UNISON Scotland's campaign for jobs, services, fair taxation and the Living Wage. This blog will provide news and analysis on the delivery of public services in Scotland. We welcome comments and if you would like to contribute to this blog, please contact Dave Watson d.watson@unison.co.uk. For other information on what's happening in UNISON Scotland please visit our website.

Tuesday, 26 September 2017

Why John McDonnell's PFI pledge is welcome and affordable

John McDonnell caused a stir yesterday with his pledge to bring Private Finance Initiative (PFI) contracts back in house. Commentators who bandy about huge sums of money to pay for this commitment are missing the point.

The shadow chancellor said in his conference speech that Labour had already pledged not to sign any new PFI deals. He then added: “We will go further. I can tell you today, it’s what you’ve been calling for. We’ll bring existing PFI contracts back in-house.




Unsurprisingly, this was immediately welcomed by UNISON, who campaigned against PFI from the outset, whichever government (Tory, Labour and SNP) used the scheme. Dave Prentis tweeted, “At long last! Our party sees sense on PFI”.

Let’s start by understanding what a PFI scheme is. Instead of borrowing in the normal way, public bodies contract with a consortium of private companies known as a Special Purpose Vehicle, to design, build and operate a public asset - typically schools, hospitals, roads and waste treatment works. The Tories invented the idea, Labour developed it and the SNP use it in Scotland to this day – albeit renamed as NPD or Hubcos. Instead of meeting the borrowing and running costs directly, public bodies pay an annual fee to the contractors.

The scheme has been criticised on many grounds and in the early years the main driver was keeping capital projects off the public sector off the balance sheet. Particularly important in Scotland because of the block grant and led to the saying ‘it’s the only game in town’. 

The main problem with PFI is that the private sector can’t borrow as cheaply as the public sector, and of course take a profit. Government can now borrow very cheaply indeed and this had led to calls to refinance such projects. PFI schemes are notoriously secretive, but we know that they are paying interest rates of 7%+, at a time when public bodies could issue bonds at a little over 1%.


UNISON Scotland set out in our ‘Combating Austerity’ plan how this can be done and save millions of pounds of austerity cuts in the process. The Public Accounts Committee at Westminster, hardly a bastion of socialist economics, also highlighted how such refinancing had been achieved in England. Sadly, while some projects have been brought back in-house in Scotland, progress has been glacial, as our progress report this summer shows.

An important forerunner to any contract renegotiations should be stricter monitoring of contracts and restructuring the existing provisions. A number of public bodies in Scotland are beginning to take this seriously, but again more could be done. At UK level John McDonnell could help by committing to changing some of the Treasury rules that make refinancing more difficult than it might be.

That’s why the commitment from Scottish Labour leadership candidate Richard Leonard is so welcome. He said: “Scotland has a huge liability to PFI and the Scottish Government’s Non-Profit Distributing scheme. The Scottish Government could and should set up a debt disposal department dedicated to raising funds to buy out the total outstanding £28.8bn PFI and NPD debt on operational contracts. Doing this could save the public purse hundreds of millions of pounds. If I’m Labour leader I’ll be pressing them on this issue and as a Labour First Minister it will be a priority.”


McDonnell’s actual commitment is fairly modest and doesn’t commit Labour to a massive increase in public spending. That’s because the public sector is already paying over the top for these schemes, so bringing them in-house would actually be a saving to the public purse. As well as giving public bodies control over vital public assets.

Thursday, 14 September 2017

Health & safety and the ageing workforce

With twice as many people working past the State Pension Age, we need to give proper attention to the health and safety implications of the changing workforce.

I have highlighted before our research into the ageing public sector workforce in Scotland. With the 50-60 age group expanding the fastest, around 40% of the workforce is likely to retire within ten years. This is reflected in the wider workforce, with one in three workers over the age of 50 by 2020.


Yesterday, I was speaking at the RoSPA conference in Glasgow on this issue.

I argued that we need to recognise that despite equality legislation, older workers face at best unconscious bias in the workplace, and at worst overt discrimination. This shows itself in attitudes towards training, development and promotion opportunities. The UK will have 7.5m job vacancies to be filled by 2022, and that's before the impact of Brexit. With one million 50-64 year olds unemployed, but wanting to work, we simply cannot allow their skills to be wasted.

As I said in a recent column in The Scotsman, we need to talk less about the demographic time bomb and more about the demographic dividend. We need to find ways of keeping older experienced staff and helping them to pass on their knowledge and skills.

That's not to say that we should ignore the health implications. Older workers are at risk of burnout, due to the physical and emotional demands of their jobs over a long period. We need to look at later life career changes, flexible working and develop a funded sabbatical policy.

Older workers have a lower incidence of short-term absence, but a higher risk of long-term illness. This needs to be reflected in sickness absence policies that have become increasing rigid in recent years. For example, workplace dementia will be a new condition for many employers to address. Some 3,200 workers under 65 have been diagnosed and this means that employers need a strategy that includes diagnosis, support and adaption. The Alzheimer's Society has a useful guide on this issue.

While there is no evidence that older workers are at greater risk in the workplace, there are some age related factors. Older workers are at marginally higher risk from slips and falls; physical strength and stamina declines with age; as does sight and hearing. However, I could produce a different list of risks with younger workers.

We therefore need to respond to the challenges and opportunities of an ageing workforce as we would for any other safety risk. By risk assessment and if necessary by redesigning jobs to reflect age factors. All the time remembering that older people are not a homogenous group, to be lumped together in a one size fits all response.

Overall, we need to change workplace culture to regard older workers as a positive gain to the workforce. This starts by raising awareness and developing a strategy. Such strategies need to recognise the health and safety implications - always remembering that work needs treatment too, not just the worker.

Friday, 25 August 2017

Barclay review - mostly sensible reforms to business rates

The long awaited Barclay review of business rates hasn't exactly set the heather alight, but its recommendations are, in the main, pretty sensible.

The reviews main recommendations are set out in this helpful infographic.


The remit for the review was that the recommendations had to be revenue neutral. This means there are gainers and losers from the changes in both the structure and the reliefs.

The business lobby has long argued that business rates are too high in Scotland. However, they conveniently ignore the wider picture of business taxation. As this chart shows, businesses generally pay less taxation than their OECD counterparts.


The report recommends a number of administrative improvements such as three yearly revaluations. This is something UNISON has long argued for and the same should apply to the council tax on domestic properties. Better information, transparency and speeding up appeals and repayments are all reasonable. Plugging the many tax loopholes and a general anti-avoidance rule is a long overdue reform.

Big companies have obviously lobbied for consistency, but while the report supports standardisation, it doesn't recommend centralisation through another quango. This should remain a local system, reflecting local knowledge and that fact that most businesses in Scotland are local. The disappointment is that the review should have gone one stage further and returned the decision making on the level of business rates to councils.

The review also questions the effectiveness of the Small Business Bonus Scheme. The government has thrown huge sums of money at this scheme that could have gone into councils. A review in Northern Ireland has found that this relief could be better directed. Reform would also pay for the generous recommended changes in business support costing £45m.

There are winners and losers of reliefs. Town centres and day nurseries get new relief from business rates. It is perfectly reasonable to use tax reliefs to encourage particular policies and early years provision is a key element of tackling inequality. However, such support should come with at least some strings. The Scottish Living Wage would be a good start for the notoriously poor employment practices in many day nurseries.

The losers come in recommendations to restrict charitable relief. Private schools have come out with a predictable defence of their status. However, it’s not the purpose of charitable status to perpetuate the inequalities in our society that private schools sustain.

 

The other is sport and leisure facilities including council leisure trusts. Despite the claimed benefits of these organisations, the primary driver was tax dodging. If this loophole is plugged, as we warned it might, then councils should be taking these services back under direct control. However, this was one of the ways that councils coped with cuts to their budgets, therefore there would need to be compensatory budget uplift from the Scottish Government.

Supporters of Land Value Tax won't be pleased with the review, even if the door is partly ajar. They came to “An over-arching conclusion that we reached is that some form of property tax is still an appropriate way to fund the local services provided by councils”. While there may be a role for Land Value Tax as part of a basket of taxation, this is the right call.

Finally, the impact of the council tax freeze is highlighted in the revenue data. This chart shows how the council tax and business rates used to raise similar levels of revenue. Hopefully, ending the freeze will start to redress this imbalance once again.


While I might have wished for something a bit more radical, the review overall recommends some pretty sensible reforms. Not without some political challenges for the finance minister!


Getting it Right for Every Child

Before the recess the Education Committee at the Scottish parliament published a report into how well additional support for learning is working in practice. The report supports the feedback UNISON had been getting from our members in schools. Scotland is not getting it right for children with additional support needs.

We have some great strategies and policy commitments to supporting children with additional needs but these have not been matched with adequate funding to enable their implementation. Schools do not have enough money for recruitment, training and support for the staff needed to meet those needs.

There is also still widespread misunderstanding about who is actually working with these children and young people on a day-to-day basis. Again and again in policy papers and inquiries the focus in on teachers, teacher training and improving their skills and knowledge. These are not the workers supporting children. It is is support workers, pupil support assistants and classroom assistants. There needs to be training and professional development for all the staff working with those children.

When the education committee held an evidence session at the parliament it was interesting to see that politicians, and policy people talked about teachers all the time but the parents talked about classroom assistants and support workers. They know who is working with their children.

No policy will work without appropriate funding. This means the day-to-day delivery of that service and for adaptions, special equipment and extra space in mainstream schools and nurseries and as the new proposals for strategic delivery acknowledge very specialist provision out with the mainstream for some.

Parents often have to fight to get the additional support their child needs. When parents (who are able to fight) “win” that fight is no additional funding attached to implement the decisions. This therefore has an impact of provision of services for other children relying on that budget. The Scottish government needs to develop a much more detail on the demand for both the strategic services proposed in the strategy and those services that will remain in local authority control. There then needs to be funding to meet those costs. It is also clear that there is a risk that those from better-off backgrounds have higher chances of winning those battles and so further increasing the attainment gap.

UNISON conducted a survey of school staff earlier in the year and while the survey was about the impact of cuts on schools, members working with children with ASN consistently responded saying that they were not getting adequate training and support to deal with the complex needs of the children they were supposed to be supporting.

Scottish government is now consulting on improved guidance for schools on “supporting children’s learning” and the "healthcare needs of children in our schools". Good guidance on these issues is very welcome but delivery of the services depends on adequate funding otherwise it will just be another set of folders on an office shelf.

Tuesday, 22 August 2017

Household debt, pay and the magic money tree

Low wages and rising household debt is not a sound basis for any economy. Today's news that spending on credit and debit cards is rising five times faster than wages, should set off the economic alarm bells.


At every recent UK budget, I tweet and blog the one chart in the OBR report that I find particularly scary – household debt. This is what I said in March this year:




This chart is scary because every year it shows that household debt is projected to rise. With wages in real decline the UK government expects households to pick up the slack caused by their austerity economics.


These chickens are now coming home to roost.  Real incomes have fallen for three successive quarters, the first time this has occurred since the International Monetary Fund bailed the UK out in 1976. Despite saving less and borrowing more, consumer spending has fallen, resulting in economic growth of 0.2% – the lowest of any of the major G7 industrial nations.


Here is a Guardian graphic illustrating the point using ONS data.






As Frances O’Grady, the TUC general secretary, puts it: “People raiding their piggy banks is bad news for working people and the economy. But with wages falling as living costs rise, many families are having to run down their savings or rely on credit cards and loans to get through the month.”



Low pay isn’t doing productivity any favours either. This chart from the Independent shows that productivity has now fallen below 2007 levels. 



There is more evidence in a recent TUC report on insecure work, which found that those sectors which had seen higher increases in productivity over the last five years tended to be those which had experienced smaller increases in insecure employment.






What governments at UK and devolved levels need is a plan to get wages rising again. They must stop holding down the pay of public sector workers by scrapping the pay cap. The minimum wage needs to rise faster reaching £10 an hour as soon as possible and stronger employment rights to tackle bogus self-employment and other forms of insecure work.


For this to happen we apparently need a 'magic money tree'. Here are a couple of branches for that tree.


Let’s have a look at those who have been doing really well out of austerity – the richest 1%. As a report by the Resolution Foundation shows, they have recouped all their losses from the slump. Some action on tax dodging would be a start as well as halting the tax cuts that simply are not trickling down.




Another is the Robin Hood Tax.  Professor Avinash Persaud has recently fleshed out a few aspects of this long standing campaign. He argues that Britain already has a financial transaction tax – it’s called stamp duty, It raises just over £3bn a year, half of it from overseas citizens. Some trading activities are exempt from stamp duty and he believes these exemptions should be restricted. He also proposes that the tax should be broadened to cover transactions in corporate bonds and cash flows arising from equity and derivative transactions. He estimates that this would raise £4.7bn a year - a pretty hefty branch for any magic money tree.


A low wage, low productivity economy is just not the way to go. We need to get wages rising, not least in the public sector after seven years of pay restraint. A different type of economy is possible and we have the wealth to support it.

Wednesday, 16 August 2017

No 'certainty' for EU workers in Brexit plan

The claimed ‘certainty’ in the UK government’s ‘cut and paste’ job on EU law clearly doesn’t apply to EU nationals working in Scotland and the rest of the UK. 
Last month the UK government published the European Union (Withdrawal) Bill. It was going to be called the Great Repeal Bill, until people started calling it Gerbill for short. Insufficient gravitas I suspect! 
The Bill will repeal the European Communities Act 1972, which means EU law will no longer apply in the UK and European Court of Justice (ECJ) judgments won’t be binding on UK courts. However, it also aims to ‘cut and paste’ EU sourced laws by incorporating them in UK law once we exit the EU. We are told this will provide certainty, with the exact same rights as the day before we finally leave.

It is questionable if it does that on workers’ rights generally, particularly in areas like health and safety. However, for the many thousands of workers who are EU nationals, the UK government’s approach is very different.

These are set out in a separate UK government proposal as part of the Article 50 negotiations. These proposals would take away rights citizens currently have, create new red tape and uncertainty for millions of people. So much for the promises made by the Leave campaign that EU citizens would be treated no less favourably after Brexit. Bit like the missing £350m for the NHS!

In contrast, the EU Commission has set out a more sensible plan, which includes: 
  • the right to acquire permanent residence after living in a country continuously for five years, no matter how many years prior to the withdrawal date the person had been living in that country. 
  • the right of “current and future family members” to join the person that has exercised their right to free movement, at any point after the date of withdrawal. 
  • the protection of recognised professional qualifications which were either obtained or recognised in any member state prior to withdrawal. 
The UK also wants a retrospective cut-off date of March 2017 for its new ‘settled status’. It is hard to see how a cut-off date other than the date of withdrawal from the EU could work and it would impact on the ability to achieve ‘settled status’ under the UK proposals. A retrospective cut-off date will also discourage health care workers from coming to Scotland now, something that is already obvious from the nurse registration data.  

There needs to be a disputes mechanism and the EU is proposing the ECJ while the UK wants it to be limited to domestic courts. I don’t think either of these would work, but it should be possible to reach a compromise position on a suitable disputes mechanism.

Getting a quick agreement on this matters not only for the workers concerned, but for the many industries in Scotland that rely on EU nationals. Universities have recently expressed their concerns over the UK plan for staff and students. A study by Deloitte’s indicated that half of skilled EU workers were considering leaving after Brexit. Nurse registrations from the EU have already almost dried up, adding to the acute staffing shortages in the health and care sector.

Nowhere in the UK is the economic and social case for immigration stronger than in Scotland. Welcome recent increases in population are almost entirely driven by migration (see chart below). 



Our working age population is not projected to increase at the same rate as the rest of the UK. The biggest increase in demand for new jobs is in health and care with 65,000 extra jobs needed by 2020. The numbers of working age Scots to support our ageing population is not going to be available without immigration. 

Public opinion polls in Scotland and the UK shows strong support for letting EU migrants stay and that includes three quarters of leave voters. By wanting to change the current status of EU nationals, the UK government position is inconsistent with its stated approach to other EU law in the Repeal Bill. 


The key principle should be the protection of existing rights for EU nationals in the UK and reciprocal rights for UK citizens living in the EU. That’s the right approach for workers and the essential services they deliver.

Friday, 21 July 2017

Action on energy prices is another damp squib

As widely predicted, UK government action on energy bills has turned out to be another damp squib. Ministers passed the buck yet again to Ofgem who have published plans for a ‘fairer and more competitive’ market. As if we haven’t heard that before! 

As the Editor of Utility Week put it“If the government is convinced that an absolute energy price cap for 17 million UK households is both expedient and desirable, it should take responsibility for delivering it – and sooner rather than later. The industry is not going to tie a noose around its own neck.”

Despite the abundance of energy supply in the UK, we still pay more than the European average. This Ofgem infographic shows how energy bills are broken down.


We are told the solution is more switching in an allegedly competitive market. However, there has been a warning that more small energy firms could go bust this winter because of increasing price volatility. David Bird of Co-operative Energy said that the regulator needed to set financial stress tests for new market entrants, to reduce the risk of firms folding and customers being left in the lurch.

On a more positive note it looks as if there may be some action on charges for pre-payment meters. 

Santander has recently highlighted how much of our declining pay packets go on largely unavoidable household bills. It looked at bills for gas, electricity, water, etc – and found they have risen far ahead of average wage rises. Since 2006, average pay packets in Britain have gone up by 19%, while the average gas bill has risen by 73% and electricity by 72%.

These are very large real rises, and all the grimmer for families and pensioners on very tight budgets – not to mention public sector workers suffering years of pay restraint. These are must pay bills that leave families with harsh choices about what to cut elsewhere.

This bitter pill is made all the less easy to swallow when the boss of one of Scotland’s biggest energy companies has been given a 72% pay rise, soon after arguing against consumers having their bills capped to save them £100 a year. The company also increased the price of its standard variable tariff by 6.9%.

Alistair Phillips-Davies, the chief executive of SSE will be paid £2.92m in 2017 after receiving the maximum possible bonuses for leading a “robust performance” by the supplier last year. The pay rise is even bigger than the 40% rise awarded to the chief executive of the Scottish Gas owner, Centrica.

Former energy minister Brian Wilson is not as convinced as the First Minister that ScottishPower is “an exemplar to our world-leading energy sector” as she opened their new HQ in Glasgow. He argues: “Such testimonials should be tested rather than asserted. Neither ScottishPower nor SSE have built a single power station since privatisation. Scotland has been turned from exporter of electricity to importer. These companies have been the biggest beneficiaries of onshore wind subsidies – without building a single turbine in Scotland. I’m not sure that is such an “exemplar” record, even leaving aside what customers think of them.”

Then we can add energy networks into the mix. They have been accused of exploiting consumers to enjoy a £7.5bn windfall of unjustified “sky high” profits.  Citizen’s Advice reckon the companies that transmit electricity and gas around the UK, including National Grid, were reaping average profit margins of 19% from their monopolies. That compares with the 4% margin that big six suppliers make selling power and gas to householders. They have called for a one-off £285 rebate to every household. Don’t hold your breath on this one, but the companies can expect a tougher price controls next time around.

In a useful analysis of the issues the HofC library argues that the key issue for Parliament will be how to make consumer markets such as energy work effectively. Can consumers be encouraged to find the best deal or does Government need to be more active? 


The simple truth is that markets have failed, not least because consumers have better things to do than spend hours battling the complexity of energy pricing. Government intervention is long overdue.