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.

Monday, 30 November 2015

Scottish pension funds and infrastructure investment

MSP’s have highlighted today how local government pension funds could make a useful contribution to infrastructure in Scotland.

The Scottish Parliament’s Local Government and Regeneration Committee has published a report on pension fund investment in infrastructure and City Deal spend. This is a good analysis of the current position and they examine the barriers to infrastructure and other socially useful investment.

The Committee draws attention to the UNISON Scotland report Funding and building the homes Scotland needs 2013. I wrote this paper with assistance from the Scottish Federation of Housing Associations. It called for local authority pension funds, with Government backing, to invest in Registered Social Landlords providing low risk and socially useful investment. Sadly, nearly three years later, there has been only a limited take up of this proposal, while £billions have been invested in overseas equities – not to mention arms companies, tobacco firms and fossil fuels.

The Committee identifies a number of barriers to infrastructure investment. Most of these have been recognised by the Scheme Advisory Board (SAB) for the Scottish LGPS and are included in their current workplan.

The investment regulations limit the amount of investment each fund is allowed to invest in infrastructure and other categories. These are overly prescriptive and the SAB at its last meeting recommended abolishing them and replacing the regulations with a more flexible code of practice.

Another barrier is lack of expertise. In effect pension funds invest in what they are comfortable with or as the Government Actuary Department (GAD) put it: “GAD considered funds didn’t invest in infrastructure because of a lack of necessary expertise to assess and quantify the risks involved, so they preferred to invest in assets with an established income stream.”

The obvious solution is to recruit the expertise. This is linked to an over reliance on expensive external investment managers. Lothian Pension Fund is probably one of the better examples of building in-house capacity in Scotland, but the best UK example is West Yorkshire, as the report notes:

37. Our attention was also drawn to WYPF and its approach to in-house investment management. In its written submission, it gave a number of advantages over externally managed funds, namely the speed of identifying potential infrastructure opportunities, the speed of authorisation for new infrastructure investments and the ability to manage investments over the longer term as in-house investment managers were free to make investment decisions based on a long-term assessment of the investment and returns.

38. This in-house approach enabled the Fund to gear its strategy towards low risk investments, over a longer period of time, and to keep fee costs down to achieve a 96% funded scheme.”

Fiduciary duty is also claimed to be a barrier to infrastructure investment. In my view this has been interpreted too conservatively by some funds in advice to their pension committee/boards. The report urges funds; “which haven’t yet considered these types of investment, to challenge themselves to do likewise and give a degree of priority to investing members’ funds more locally and building in elements of public good”. This is sound advice and I have written a briefing on fiduciary duty for our members on pension boards that sets out how this can be done. The SAB has also commissioned further legal advice and plans to issue guidance to funds on this issue next year. As the committee puts it; “We make the point that without some degree of risk taking, innovation will not happen. We see parallels with the taking of a narrow interpretation of the fiduciary duty

The report briefly touches on the pooling of funds as one way over reducing costs and building expertise. This follows the UK Government’s decision to push funds in England and Wales into six ‘wealth funds’. Guidance on this was published last week as part of the Chancellor’s Autumn Statement. The Committee was ‘less attracted’ to this formal approach, drawing attention to the informal links that exist between funds in Scotland. The SAB has this issue in its workplan and is starting with new data collection tools that should inform this exercise. Pooling investment is not just an issue for infrastructure investment. It is also a means of improving transparency and reducing the very high costs of external investment.

Finally, the Committee looked at the topical issue of ethical investment and concluded:

43. While considering rates of return, it would be remiss of us not to consider investments in certain industries, for example, fossil fuels, arms and tobacco. These might provide a high rate of return but we question whether local government pension funds should be investing in such industries given social, environmental and ethical considerations. We note Strathclyde Pension Fund’s view these industries would be less responsible if public pensions did not invest and also that collective action by investors can have a greater influence on the industry. We consider funds should be guided by consultation with their members on this issue.”

The Committee is right to question such investments as UNISON representatives have been doing at pension boards. While pension funds are part of local government they are also bound by public law duties that government has placed on councils, such as climate change.

Overall, this short inquiry is a useful overview of pension funds and infrastructure investment and well worth a read. Most of the issues they have identified are being taken forward by the SAB, but there is also an issue of pension fund culture to be addressed. That may be a more intractable challenge.

 

Wednesday, 25 November 2015

Health and social care funding pressures

The NHS and publicly funded adult social care will account for £157bn of public spending across the UK in 2015/16 – equivalent to 8.4% of gross domestic product (GDP) and accounting for around £1 in every £5 of government spending.

Economists at the Health Foundation and the Institute for Public Policy Research (IPPR) have published a report that looks at the scope for public funding to match these pressures and what the potential funding gap for health and social care looks like. They model the potential revenue that might be raised by different taxes to fill a health and social care funding gap, the distributional impact of the different tax options and how they compare to the profile of the ‘beneficiaries’ of additional health and social care spending.

While the analysis starts from English spending, they do try and extrapolate the numbers to paint a UK wide picture. The pressures in Scotland are in any case very similar. The solutions in Scotland may be different because of our different policy approaches, like 'free' care for the elderly.

The main findings are:

•Our analysis shows that despite government commitments to additional funding for the NHS in the UK, there is still likely to be a shortfall of £2bn in 2020/21, rising to £9bn (above inflation) by 2030/31.
•For adult social care the pressures are greater. We forecast a funding shortfall of £6bn by 2020/21, rising to £13bn in 2030/31, assuming there is no change in policy.
•The projected health funding gap of £9bn in 2030/31 is worth 5% of the projected budget that year; for adult social care the funding gap of £13bn is equivalent to 62% of the total expected budget for 2030/31.
•The combined pressures on health and social care funding will amount to an estimated shortfall of £8bn in 2020/21 and £22bn in 2030/31.
•The government has committed to eliminating the deficit in the national budget by 2019/20 and is planning to run a surplus of £10.5bn (0.5% of GDP) by 2020/21. If the planned fiscal surplus of 0.5% of GDP were spent on health and adult social care, it would close the combined funding gap in 2020/21, but leave an estimated shortfall of £8.4bn in 2030/31.
•One alternative to taxing income and employment is to tax consumption and in particular consumption that has a harmful effect on health – a so called ‘sin-tax’. The report looks at taxing sugar specifically.
•There are choices that need to be made about the medium to long term financing of health and adult social care. One option is to bridge some of the gap through a lower public finance surplus than currently planned; another is to increase taxes.
•While our analysis suggests that the NHS faces considerable pressures, it does not appear unsustainable. However, there must now be real doubts about the sustainability of the current financing system for adult social care.



Social care funding in Scotland is already at crisis point. This report shows that funding pressures are not going to get any easier and some very tough political decisions will be required.

Tuesday, 24 November 2015

Time to look again at Police Scotland's budget

There needs to be a root and branch look at Police Scotland’s budget next year. We can no longer paper over the cracks caused by badly managed centralisation.

Police Scotland’s finances got off to a poor start when the hastily drafted outline business case was never followed through to a full business case as Audit Scotland confirmed. As a consequence there remain unrealistic expectations of what can be achieved. This is illustrated by a £25m (and rising) budgetary black-hole in the 2015/16 budget.

IT systems that are crucial to reform have suffered from delays and overspend. Getting systems right is not just about cost and efficiency, as the M9 tragedy showed. The HMICS report has taken into account the high level of pressure that UNISON police staff members work under in the Contact, Command and Control (C3) division of Police Scotland. Let’s hope this report shapes the C3 direction with greater accountability and assurances for the public.

The findings of the Police Scotland staff survey are a stark reminder of the impact reform has had on the workforce. A committed and dedicated workforce has become increasingly demoralised and overworked with the perception that the organisation they work for doesn’t care and won’t invest in their health, safety and wellbeing. Only 8% of staff thought the organisation was genuinely interested in staff wellbeing.

Police reform was meant to identify efficiencies through reductions in duplication of posts. However, proposals are purely designed to reduce budgets, not reduce duplication. Through the pursuit of an agenda of centralisation, we have seen the closure of mainly local service provisions such as; station front counters, call-handling, control rooms and custody. This has resulted in police staff who come from and are stakeholders in the communities they serve, being sacrificed to maintain police officer numbers at an artificially high number.

There has still been no indication that detailed work has been carried out to establish the number of officers required to police Scotland. The previous Chair of the SPA announced that this work was to go ahead shortly after his appointment, but we are still waiting. Nor has any work been carried out to establish how effective this figure is in maintaining low crime figures. Police Scotland has a statutory duty to abide by Best Value principles and a proper study is long overdue.

Significant numbers of police officers are now performing roles which can and should be performed by police staff at a fraction of the cost. Recent figures show that there may be a gap of approximately 7,000 police officers who are not frontline when compared to the 17,261 officer strength figure quoted by the SPA.

As Dr Kath Murray, from Edinburgh University, puts it: “Unlike England and Wales, data is not available on rank or officer function. There is no data on officers available for duty, nor the numbers that join or leave the force. Meanwhile, the published totals include officers on maternity leave, long-term sick leave and on secondment. The net result is that officer strength in Scotland cannot be openly scrutinised or analysed.”

The decision to employ 1000 extra Police Officers was taken pre-austerity and there is now widespread support to review this figure. For example, the Police Superintendents (APSE) has said: “There is clearly some significant budget pressure and challenges ahead. We would like to see an intelligent conversation to consider all of the options. Included within that would absolutely be whether the lock-in on 1,000 additional officers remains the right policy, or whether it’s time to review that and look at more of a mixed staffing model.

It is now time to look closely at the total workforce requirement of Police Scotland to ensure a balanced workforce; the correct types of Staff or Officers carrying out roles appropriate to their qualifications and needs of the organisation.

I would also agree with colleagues in the Scottish Police Federation that the Scottish Government would be foolish to continue with its programme of police cuts in the wake of the Paris terror attacks. This is only one of many additional burdens being placed on Police Scotland.

The unique and major flaw in police reform has been the cosmetic police officer number target that should have corrected when Police Scotland was created. This flaw does not allow management to make the right Best Value decisions to create an effective, efficient, modern police force for Scotland. It’s time to change course or it will only get worse.

Friday, 13 November 2015

Eliminating fuel poverty by Nov 2016? I think not.

Given the short term thinking that bedevils much political thinking, we can be forgiven for looking cynically at government targets that stretch long ahead of the political cycle. However, sometimes they catch up with governments. One such legislative target is the eradication of fuel poverty in Scotland by November 2016.

This target is given some focus for me today, as I am chairing a session at the annual conference of the fuel poverty charity Energy Action Scotland. UNISON Scotland is affiliated to this campaigning charity that also delivers a wide range of practical actions to help alleviate fuel poverty.

Fuel poverty is defined as a household having to spend 10% or more of its income on energy to maintain a warm home. When I first got involved it was almost exclusively an issue for the elderly - no longer.

A recent report by Citizen's Advice Scotland told the story of a father of a two-week old baby who was left without any money for gas and electricity, after being told he had to wait two weeks for a Universal Credit payment. Another case in the east of Scotland involved a couple with a nine-month-old baby girl being left without any money for food or gas and electricity. Their benefit was stopped by the Department of Work and Pensions after it claimed a sick note had not been received - even though it had been sent the previous week.

According to CAS, the number of Scots in 'fuel poverty' has soared by 130% in the past five years, with shocking cases of struggling households being left for months without any means of heating or cooking. They dealt with 28,000 cases involving energy issues in 2014-15 – an increase of a third from the previous year and up 130% since 2011.

Energy Action Scotland's Director Norrie Kerr, has also said that they see a lot of younger people in fuel poverty who are on the minimum wage or less than the minimum wage, who are really struggling just to make ends meet: “It is not just about pensioners any more, it is about in-work poverty. When you are being squeezed like that there is the very real dilemma for people between heating and eating. In some cases foodbanks are being asked for food parcels that don’t require people to heat anything, because they are frightened to put on the cooker to boil a pan of pasta or heat a tin of beans."

So, are we going to meet the legislative requirement to eliminate fuel poverty by November 2016? Based on what we heard at today's conference, almost certainly not. Are we making sufficient effort to try and reach this target? Again probably not.

One particular disappointment is the Scottish Government's decision to postpone a consultation on energy efficiency measures in private sector housing. This is the fastest growing housing sector and landlords need help and support, and tenants need protection against unjustified rent increases. CAS covered this issue well in their report 'Coming in from the Cold'.

Funds have been made available for fuel poverty, but it simply isn't enough. We heard about a some measures and more task groups and reviews. As with other policy areas we are very good in Scotland at analysing the problem - less good at making difficult decisions to solve them. Equally the UK government programmes are also inadequate, but as some are to be devolved, we have an opportunity to bring programmes together and do some things differently.

Energy efficiency is only one aspect of the measures needed to tackle fuel poverty. The other two are the price of energy and income support. Action on prices have been limited with the cost going up by 180% between 2002 and 2013. If prices had gone up with inflation fuel poverty in Scotland would be below 11% of households, instead of 39%. It has only been helped very recently by the drop in wholesale prices - rather than government action over the failed energy market.

Government's put great emphasis on switching supplier and there has been some increased take up recently. However, it is far from a smooth process. I recently switched supplier and was presented with an absurd estimated opening gas reading that was almost double my last bill. As a consequence I was presented with a bill for £3,600!

On income support, the U.K. Government's slashing of social security is having a devastating impact on low income families in and out of work. We should also not forget the cut in real wages over a decade or more. This is something the Scottish Government could do more on, including the living wage for care workers. As Jackie Baillie reminded us today, the £1300 cut in Tax Credits is the equivalent of the average annual fuel bill.

If the same number of people suffering from fuel poverty had an illness or disease we would be crying out for the government to take action by pouring resources into the NHS. It's time to treat fuel poverty with the priority it deserves.

Wednesday, 11 November 2015

Bad news on the economy and Tax Credit cuts will make it worse.

The Scottish economy is slowing and cuts to tax credits for low paid workers won't help.

Strathclyde University’s Fraser of Allander Institute has published its latest commentary. It shows that the Scottish economy had slowed both in absolute terms and relative to the UK. The divergence with the UK has occurred even though expansion in the UK as a whole was slowing significantly.

Editor, Brian Ashcroft, also urged Chancellor George Osborne to think again about his planned £4.4 billion per annum of cuts in tax credits. He highlighted the impact on domestic demand and UK economic growth. He said: “The overall plan is to take £12 billion out of the economy, which is quite large. Tax credits are quite a large component of that. You are taking money away from individuals who would spend that money, whereas other people with more money would save more of it. There is a direct impact on spending that is going to affect demand in the economy.”

This supports the message of UNISON General Secretary Dave Prentis on tax credits, he said: “Mums and dads – who are already walking a financial tightrope because money is so tight – have been having sleepless nights at the thought of losing as much as £50 a week next April. Working families will now hope the government re-thinks its heartless decision to snatch so much away from so many.”

This is because Tax Credit cuts cannot be balanced simply by raising wages. Tax Credits were introduced to support working families by recognising the extra expenses of raising a family, a role businesses cannot be expected to fill, and are paid to households rather than to individual workers.

The Allander analysis has been reinforced by today's labour market statistics. As the STUC commentary says:

This was another disappointing set of statistics which confirms the swift reversal in Scotland’s labour market recovery. Over seven and a half years since the recession took hold, Scotland’s unemployment rate is still precisely 50% higher than its pre-recession trough. While all age employment has seen a very small increase over the year, growth is now basically stagnant. If jobs cannot be found for people returning to the labour market then unemployment is unlikely to fall over the coming year. The prolonged period when women benefitted disproportionately from the labour market recovery has now ended with women accounting for most of the rise in unemployment. The small increase in total all age employment also disguises a significant fall in employment for women."

And there is little good news on wages. As this TUC chart shows, today’s Average Weekly Earnings figures show what is beginning to looks very like a pause in the recent improvements. This is reason to worry that stalling earnings may again act to stifle household demand.

The Chancellor's Autumn Statement on 25 November will be an important indicator of what action he will take to support the economy. The Scottish Government will then publish its spending plans for next year. Action on jobs and wages should be their priority.

 

Monday, 9 November 2015

Extending the Scottish Living Wage through procurement - vital in social care



A new UNISON Scotland Briefing has been published explaining how public bodies can use procurement to extend the Scottish Living Wage to all those working in public services.

Nearly all public sector workers in Scotland are now paid the Living Wage, (uprated this month to £8.25 per hour) but thousands who deliver public services in the community and private sectors don't yet receive it, particularly in social care.

New Statutory Guidance from the Scottish Government sets out how the Procurement Reform (Scotland) Act 2014 enables all public bodies to spread the benefits. Previous legal objections no longer apply.

Infrastructure Secretary Keith Brown said that employers "must now recognise that they cannot adopt exploitative practices in relation to their workers and expect... lucrative public contracts."

The Guidance on Addressing Fair Work Practices sets out how public bodies can legally include payment of the Living Wage in contracts, along with other employment matters, such as trade union recognition and representation and no "inappropriate" use of zero hours contracts.

(The Living Wage is a voluntary level for over 18s, higher than the current statutory National Minimum Wage (NMW) of £6.70 per hour for over 21s. It is an independent calculation of what is required to cover the basic cost of living.

While the increased legal minimum announced by Chancellor George Osborne as a new National Living Wage (NLW) of £7.20 per hour for over 25s in his July 2015 Budget is welcome, it is in effect a higher NMW, not a real living wage. It is nothing like enough to compensate for cuts to tax credits. IPPR Scotland said for low and middle income Scottish families the impact is "vastly outweighed" by the cuts.)

It is vital to progress the Living Wage in social care, which is facing a growing staffing crisis. The Scottish Government, COSLA and care providers are currently involved in discussions about how best to drive up pay in the care at home/housing support sector, recognising the links between pay, quality of care, retention and recruitment etc.

An interim funding deal is likely, with work continuing on a more robust proposal for 2016/17, alongside analysis of the full financial impact of the NLW 2016 to 2020 announcement and the overall cost of residential and non-residential social care.

UNISON wants to see the Living Wage included in all social care contracts and will also press our Ethical Care Charter. However, we accept that this has to be fully funded.  We welcome the Scottish Labour party's proposal to pay the Living Wage to all those working in social care.

UNISON branches should study the guidance in detail and ensure that public bodies: revise their procurement strategy to include the Scottish Living Wage; specify compliance with the S52 guidance in procurement documents and the consequences for the LW; revise their tender evaluation procedures to take account of the LW and other employment and 'fair work' standards. These can include no zero or nominal-hours contracts, trade union recognition and the Ethical Care Charter.

Under the Act, public bodies are required to set out their general policy on the Living Wage in their procurement strategy. Bids can be evaluated against that policy and payment of the Living Wage can become an enforceable performance clause. For contracts with a strong workforce element, such as social care, there can be a significant weighting in the evaluation for workforce matters.

With a civil society coalition behind '10 Asks' on the legislation, we had called for the Living Wage to be mandatory for all those working on public contracts. The guidance does not go that far but is an improvement.

UNISON still believes that EU law would allow it to be set as a contract condition. Advocate General Mengozzi's opinion, given on 9 September 2015 in RegioPost GmbH v Stadt Landau (C-115/14), was that EU law did not prevent contracting authorities setting conditions relating to the payment of minimum wages.

Further Statutory Guidance later in 2015 will cover areas including the Sustainable Procurement Duty, fair trade and tax dodging. There is separate guidance on blacklisting.

Wednesday, 4 November 2015

Under Pressure


Today’s report by the Institute of Civil Engineers suggesting the introduction of road tolls to fund repairs highlights the impact of funding cuts and tax freezes on public services. They state that one third of our roads are in an unacceptable condition and that we need to spend about £250 million a year to stop it getting worse.

Yet again we are talking about replacing progressive taxation to pay for services with charges which bear no relation to people’s ability to pay. UNISON and Audit Scotland have already highlighted this growing trend. Meanwhile budget cuts are no longer being able to be met by salami slicing and non replacement of staff. Councils are discussing major cuts to service provision.

Falkirk Council is facing £45m cuts over three years, Fife £77m. Glasgow is facing a 7% budget cut: 3000 jobs are at risk. Edinburgh, with cuts of £126m over four years, is claiming that it may not be able to stick to its no compulsory redundancy agreement.

North Lanarkshire Council is discussing plans to meet a budget hole of £68 million pounds: which will involve the loss of 1100 job. This will have a massive impact on businesses in the area. West Dunbartonshire is discussing cutting winter gritting, doing away with free school milk, ending its elderly respite care and reducing crisis support for teens. Plans to meet the budget cuts also include increasing charges for school dinners and bulk refuse uplifts.

One of the many problems with these plans is that they will actually lead to increased costs in other budgets. Less gritting means more falls so more broken bones and higher costs for the NHS. Less respite care puts more pressure on carers impacting on their own health and ability to provide care leading to need for more expensive acute services for both carers and the people they care for. Reduced support for crisis teens can lead to those young people harming themselves and others which increased need for acute mental health services and increased crime and anti social behaviour, adding costs to the police and prison services. We are supposed to be focusing on preventative spending instead we are just storing up costly problems for the future.

Another example is the impact of cuts in trading standards departments. An article in the Herald shows that councils have lost one in eight of trading standards officers since a 2013 report warned the service was under threat. This means rogue traders are able to exploit shoppers much more easily. This not only impacts on people who buy shoddy or even dangerous goods but seriously impacts on legitimate businesses who lose customers to the cowboys.

Relying on increased charges to increase income is much less fair than using taxation. It could lead to more dumping and therefore increased costs in terms of clearing up the mess and young people eating cheaper less healthy food outwith schools or going without.

No matter what the politicians are saying local government is facing a massive financial black hole.